CARETAKER Prime Minister Anwar-ul-Haq Kakar on Thursday told a delegation of businessmen that the government was reforming the tax system through digitization and underscored the need to boost tax collection for economic development. He met a delegation of the Islamabad Chamber of Commerce and Industry (ICCI) in the federal capital today where he said the interim government would bring economic stability by winning the confidence of traders, industrialists and investors.
It has to be appreciated that the Federal Board of Revenue (FBR) has achieved significant progress towards digitization of the tax system, making it transparent and bringing more people into the tax net. Linkages of the system with other departments and institutions have also led to identification of potential tax-payers and tax evaders whereas filing of the return electronically has facilitated not just the tax payers but also the collectors. The FBR has ambitious targets for the current financial year as it plans to bring one million new tax-payers on the tax roll and 20,000 retailers to the POS system by the end of June 2024. Bringing one million more to the tax net seems to be a daunting task but the penalties introduced for non-filers might encourage more and more people to become filers. However, there can be no meaningful increase in tax collection until and unless all businessmen, industrialists and professionals are made to pay their taxes commensurate with their incomes. No doubt, FBR has access to data and figures enabling it to identify tax dodgers but its capacity will have to be increased and strengthened to ensure compliance of tax laws. Despite achievements made by the FBR, there are still complaints that Pakistan’s tax system is ineffective, unfair, fragmented and leaves out entire sectors of the economy, worsening structural imbalances. There are a range of exemptions that cost the country over Rs 1.7 trillion a year besides unilateral exemptions given to specific industries and sectors for specific periods as political favours. Instead of increasing burden on the existing honest tax-payers, the government should devise a strategy to tighten the noose around the neck of tax-evaders and under-taxed segments of the society.
