THE Federal Board of Revenue (FBR) has notified 145 District Tax Officers (DTOs) across the country in a bid to bring 1.5 to 2 million people into the tax net during the current financial year. Under the tax laws, the FBR has also been authorized to disconnect utility connections including electricity and gas connections and block mobile SIMs if a return is not filed in response to notices issued. The DTOs would obtain and utilize third party data acquired from multiple departments and agencies that hold critical information regarding investment in assets and incurring of huge expenditure by potential taxpayers who till now have managed to escape and stay away from the taxation system including registration and filing of tax returns.
There can be no two opinions that a quantum jump in tax collection is the only viable option to help resolve most of the economic and financial woes of the country. It is a matter of concern that out of a population of 240 million, only 4.9 million filed returns during the last financial year. There are around two million people who filed returns just to become filer to avail various incentives but paid no tax at all and, therefore, there is a good scope of hunting down potential non-filers/ tax dodgers to broaden the tax base. Thanks to technological developments and close liaison with other departments and agencies, the FBR already has a reservoir of information about financial transactions by different segments of the society that can help bring more people into the tax net. So far no worthwhile progress towards inclusion of more people into the tax net could be made because of internal weaknesses of the FBR. The establishment of dedicated offices at the district level would give a push to the process and hopefully the target would be achieved during the year. However, it may be pointed out that mere issuance of notices and return filing would not directly result in more tax collection if tax-dodgers are not probed thoroughly. We have been emphasizing in these columns, time and again, that a majority of the business community and professionals like doctors, engineers and lawyers are minting money but they either pay nothing or a fraction of their incomes as tax. The DTOs should, therefore, focus on shopkeepers, eateries and professionals as this has the potential to generate enough revenue obviating the need to burden the existing tax-payers further. There is a possibility that these tax-evaders would increase the margin of their profits and charges for their services compounding the inflationary pressures in the country. It is hoped that the Federal and provincial governments would activate the existing price control mechanisms to check such tendencies.
