As people of Pakistan are crying hard under the burden of direct and indirect taxes, media reports suggest that government is contemplating to present a mini budget because of its failure to meet tax collection target for first quarter of the new financial year. The Federal Board of Revenue (FBR) has reportedly proposed severe punitive measures against millions of tax-evaders including freezing their bank accounts, slapping a ban on their purchase of properties, vehicles and disconnection of electricity and gas connections.
The government is surely in a catch-22 situation as some segments of the society are not fulfilling their national responsibility of tax payment and in case punitive steps are implemented these could lead to a backlash besides possibility of innocent people becoming victims of these measures. According to official sources, internal assessment of the FBR shows a tax shortfall of Rs. 220 billion against a target of Rs. 2,652 billion. The FBR faced a shortfall of Rs. 98 billion in August and it is unlikely that it will be able to collect Rs. 1,196 billion during September to materialise the first quarter target. The plan to impose severe penalties on non-filers and under-filers is understandable, as government cannot afford to burden existing taxpayers further. We have been emphasising in these columns that some segments of the society earn handsomely but are not willing to pay taxes. This has been highlighted by the plan to bring traders into the tax net, which miserably failed due to pressure tactics of the businessmen. The government would be justified to impose bans of different sorts on elements who have taxable income but are not ready to contribute to national exchequer. However, there are big question marks about ability of the FBR or other organs of the state to identify and take to task tax evaders in a fair and transparent manner. We have seen in the case of government decision to disconnect mobile phone SIMs of non-filers yet the measure could not yield desired results and instead countless complaints surfaced about disconnection of numbers of those who were not even required to file tax returns. Therefore, action against tax evaders yes but no to unnecessary difficulties for innocent citizens.
