High tax returns in 2018

TAKING to the twitter, Finance Minister Asad Omar said on
Saturday that 1,492,507 individuals across the country filed their tax returns this year. The government, after multiple extensions, had fixed December 17 as the last date for filing tax returns and according to the Finance Minister the number of tax returns filed this year was thirty four percent higher than the previous year- which indeed is a positive development but more steps such as simplifying the procedures need to be taken to bring potential tax payers in the tax net.
Of the total population of around 200 million, only 0.5 percent pays income tax and files a return – one of the lowest in the region and world. This is the reason that revenue authorities maximise their focus on indirect taxes, which contribute towards more than 60% of the total revenue. Indirect taxation is a regressive taxation system affecting the poor and deprived segment of society the most – resulting in increased income inequality and wealth disparity. PTI led by Imran Khan had repeatedly made promises of enhancing tax collection after coming to power by introducing basic reforms in the FBR. This process has started but it should be quick ensuring that reforms are also genuine in nature that brings real change in the collection of revenue.
This is also need of the hour given the challenges faced by the country on economic front. Until and unless, we do not collect money from potential individuals and sectors, we will not be able to stand on our own feet and spend on important sectors such as social and infrastructure development. The focus should be shifted from indirect and withholding taxes towards direct taxes. The share of agriculture in total tax collection should be increased. Similarly other sectors such as real estate must be brought to the tax net in real sense. Well-documented economic and structural reforms in the FBR will set the stage for a progressive, sustainable and equitable taxation system resulting in improved revenues. This will reduce government’s dependence on loans, grants and will boost economic growth and development, paving the path towards real prosperity. Such a course will also provide much cushion to the government to reduce or totally do away with indirect taxes and doing so will provide a great relief to the common man, as it will greatly help bring down the prices of essential commodities. The common man has already greatly appreciated the Supreme Court’s initiative of doing away with the taxes on mobile phone cards. Tax refunds and cases related to tax evasion and collection need to be disposed of at the earliest.
Most importantly, tax related laws need to be revisited and the FBR should go for simplification of the procedures that facilitate the taxpayers, as this will encourage them to be more forthcoming in filing their returns. For a long time, we have been hearing that the FBR is bringing a one-page simple tax return form for the employees whose taxes in fact are deducted from their salaries but still we do not see any progress towards that end. Most of the employees and other people cannot file their returns because of the complexities involved in filing the current forms. Thus by mere simplifying the procedures, the number of tax returns can further be enhanced.

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