MINISTER of State for Finance Ali Pervez Malik Thursday said tax machinery would dispatch notices to 5,000 high-net-worth individuals with a value of Rs27 billion, and the government could fetch Rs7 billion from them. Addressing an event arranged by Policy Research Institute of Market Economy (PRIME), he said based on the audit and transaction information of 200,000 potential non-filers, FBR would dispatch notices to 5,000 high-net-worth individuals within two weeks.
The Federal Board of Revenue (FBR) has been claiming for long that it has detailed information about assets and income of most of the citizens but progress is slow in transforming this information into tangible action for the tax purposes. It is pathetic to know that the individuals mentioned by the Minister owned at least three cars, earned Rs100 million profit on their bank accounts, paid over Rs200,000 monthly credit card bills and educated their children in private schools but pay no income tax. Their estimated net worth is Rs27 billion and the government expects Rs7 billion in revenue from them. The FBR has significantly increased the tax collection but still missed some targets for the first quarter of the current financial year, prompting fears that the Government might be forced to go for a mini-budget. However, the revelations of the Minister confirmed the oft-repeated argument that the tax collection can be increased meaningfully without burdening the existing taxpayers if the authorities go after non-filers in a determined manner. Generally, the IMF is criticized for its intrusive policies but it deserves appreciation for showing a way out to the Government to manage its expenditure by imposing agricultural tax and proposing to the provinces to contribute funding for the Benazir Income Support Programme (BISP) and Higher Education Commission (HEC). This makes sense as provinces get the lion’s share from the federal divisible pool and are also major beneficiaries of the BISP and spending on higher education. The Government should also listen to the proposition of former Finance Minister of Georgia Aleksi Aleksishvili during his speech at the Islamabad event that his country simplified the tax system and reduced them just to six to foster tax growth.
