The Federal Board of Revenue team of tax managers headed by Sohail Ahmed on Thursday categorically brushed aside the notion of Rs 500-600 billion alleged corruption in the tax machinery and showed full confidence in the new sales tax refund system at the National Assembly Standing Committee on Finance hearing.
The FBR Chairman demonstrated his confidence in the tax machinery with the comments that he is hearing such exaggerated stories of corruption in the FBR, which carry no truth. The tax managers shared working of new refund system with the business community, reflecting effective implementation of a key component of the reformed general sales tax (RGST) ie Expeditious Refund System (ERS).
During committee proceedings on the second day while reviewing the General Sales Tax (GST) Bill 2010, FBR Chairman strongly objected to the so-called figure of Rs 500-600 billion quoted as volume of corruption in the FBR. There is no study or assessment, which has worked out this figure of Rs 500-600 billion. "I do not deny corruption, but the figure has not been based on any study, research or assessment study," Sohail Ahmed told the committee.
He said that former Finance Minister Shaukat Tareen has referred to the joint study of FBR and the WB which has pointed out potential of Rs 500 billion by exploring new avenues and checking tax evasion. If all kinds of efforts are being made to improve collection up to the provincial level, the government can generate over Rs 500 billion by plugging the leakage. I can present the joint study of the FBR/WB before the committee to confirm the figure of Rs 500 billion. However, this figure of Rs 500 billion as tax potential has been wrongly misinterpreted with alleged figure of Rs 500-600 billion by different persons. The said study has never referred to any figure of Rs 500-600 billion as alleged corruption in the tax machinery.
He said that the leakage in revenue collection is mainly due to three reasons ie tax avoidance, tax evasion and corruption. Under the self-assessment system, the FBR cannot go the taxpayer and force him to deposit the sales tax. "What is stopping people from declaring their actual income honestly", Sohail Ahmed raised question.
Tax authorities made it clear before the committee that the result of self-assessment is evident from the data that nobody is ready to honestly deposit the actual taxes. Why the people are not ready to voluntarily pay their due taxes. The corruption has been discussed in the meeting, but why the committee does not discuss the attitude of the taxpayers for not making any tax payments under self assessment regime, he added.
Referring to the public perception survey of Transparency International (TI), Sohail Ahmed said that the survey has shown gradual decrease in corruption of income tax and customs officials. The image of the tax departments has been considerably improved with the passage of time due to reforms. The performance of the FBR has been improved over the time and different studies have proven the fact.
Responding to different proposals of exemptions under the RGST, Sohail Ahmed said that if we start giving exemptions to everybody it would again result in distortions. Internationally, this concept is known as "exemption creep syndrome," which result in systematic expansion of exemptions.
When representatives of All Pakistan Textile Mills Association (Aptma) apprehended about new refund system, FBR Chairman said that it is shocking to hear that the textile units still think that they would have to physically go to the tax offices for processing of refund claims under the Expeditious Refund System (ERS).
Sohail Ahmed was very much confident that the new sales tax refund system would be able to pay refund electronically within 7-10 days as compared to the admissible period of 45 days. Assisted by FBR Chairman, Abrar Ahmed Khan FBR Member Strategic Planning and Statistics promised that we will successfully run the system and demonstrate payment of refund in only seven days and there should be no doubt about it. The FBR Member said that three things would be crucial for payment of refund under the new system ie invoice matching, confirmation of exports through shipping bills and checking of additional value addition. "The FBR is dispatching centralised refund cheques to the exporters within 7 days of filing claims. Our new could deliver results and we will deliver results," Abrar stated.
The FBR Chairman also informed the committee that any delayed refund beyond period of 45 days is subjected to compensation in the form of interest. However, FBR is paying refund in few days as compared to specified period of 45 days under the law.
On a proposal to abolish clause of documentation under the RGST, Sohail Ahmed said that the whole concept of the RGST has been based on the documentation of undisclosed buyers and sellers. The concept of the RGST is that the registered person who not carryout business with the "Benami" persons. The condition to obtain Computerised National Identify Card Numbers (CNICs) of the unregistered buyers and sellers would be a major step of documentation under the RGST. The argument for not disclosing identification of the "Benami" buyers/sellers is not justified under the documentation exercise. If only this specific clause would be withdrawn from the GST Bill 2010, then the whole proposed Bill should be taken away, tax authorities commented.
To another question, he said that the private sector should identify corrupt officials to the tax authorities and the Board would definitely take action against such officials. He said that I have taken action against two deputy collectors of customs before Eid. Business community should come forward to identify such corrupt elements for taking action against them, he added.
Comments
Comments are closed.