EDITORIAL: It seems FBR (Federal Board of Revenue) is throwing the kitchen sink at non-filers in its latest, desperate attempt to expand the tax net. While it’s been trying for a long time – even threatened suspension of bank accounts in the past (though without actually following through on it) – it’s never gone as far as stopping local travel, through motorways and highways, as well as foreign travel, through airports.
Now, it says, non-filers will not just face penalties, fines, disconnection on utilities and freezing of bank accounts, but also, in extreme cases, limits on their movement on motorways and airports.
No doubt the push from the IMF (International Monetary Fund) – which requires serious expansion of the tax net and increase in revenue for further bailout programs – is behind this latest initiative. It’s encouraging that FBR field formations, spread throughout the country, are conducting surveys and collecting information about businesses and commercial activities, which shall be made available on its website.
It remains to be seen, though, if authorities have taken any steps to check corruption within FBR that has compromised similar exercises in the past.
Regardless, it’s shameful that a country of (at least) 240 million has only 5.2 million income tax filers. That is why it has one of the lowest ratios of tax-to-GDP in the world, at 10.4 percent, against a tax capacity of 22 percent of GDP, according to the World Bank’s “Strengthening Government Revenues” report published in September this year. All this makes FBR’s new drive to spread the net wider even more urgent.
It is important to note that rules regarding which people qualify as tax fliers are quite exhaustive. All members of public bodies, chambers, media organisations, even members of medical associations, who do not practice medicine anymore, are required by law to file their returns. In fact, you don’t even have to be liable to pay income tax to file returns. These rules have always been in place, it’s just that FBR has never been able to implement them.
But now it’s run out of time and options. The country has no way of surviving, which right now means avoiding sovereign default, without IMF support. And the Fund has made it pretty clear that failure to meet its own demands, one of which is tax net/revenue expansion, will lead to an abrupt termination of its bailout programs.
Yet despite the FBR’s spirited statements, questions remain about its capacity and even commitment to the task. For, the Board was the centre of considerable controversy itself not too long ago when news emerged that many on its own staff were non-filers and tax evaders.
It’s also no secret that it is one of the most corrupt outfits in the whole country. And, for all the talk of FBR reforms, etc., we have yet to see any sort of on ground progress at all.
FBR’s move to go all out after non-filers is a good one. It should either follow the rules to the letter, or change them. There’s no point in having them in the books and not following them in practice.
Copyright Business Recorder, 2023
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