Tax experts have lauded the idea of fixed tax introduced by the Federal Board of Revenue (FBR), saying that taxpayers would like to avail it as they would get rid of the harassment as a result of raids by the field staff of FBR. The idea of fixed tax would be implemented in Islamabad and Rawalpindi at the first stage, followed by rest of the country.
Taxpayers would feel comfortable as they would have not to file a return and prefer to pay a fixed tax amount on the basis of electricity consumed by them. The tax would directly be paid in banks the receipts would be exhibited to department on demand. For traders, it would be an ideal situation that there is neither the hassle of self-assessment scheme nor the audit, said tax practitioners.
"The FBR can charge it in two installments," they said and added that this mode of taxation would generate more revenue than the present self-assessment system.
They said the self-assessment scheme is the main cause of low tax recovery. Late General Zia-ul-Haq had introduced self-assessment tax scheme that provided the facility of no audit in case taxpayers file a return with enhanced amount comparing to the last tax year. However, Pervez Musharraf had introduced universal assessment scheme that gave option of filing zero return with a mandatory condition of audit. Tax experts are of the view that both General Zia-ul-Haq (late) and General Pervez Musharraf (retd) had introduced this system to create a constituency during their regime.
However, civil governments of the past have not been as active on this front as the present government is. They said Prime Minister Imran Khan is carrying a perception that the FBR is not only short of target but also far away from its real potential of tax collection. However, they have added in the same breath that Imran Khan is least bothered about the fact that tax collectors are harassing taxpayers.
They said taxpayers do not pay tax because they believe that they are overcharged. Secondly, every tax payer has an impression that he is paying more tax when compares himself with those who do not pay tax. Finally, the third factor is that of audit, which has proved an impediment in tax system.
They have lamented that the field staff keeps the government in dark while arm twisting of taxpayers by force on false assessments. A list of 100 taxpayers has recently been submitted to the finance minister, suggesting that billions of rupees have been collected through recent raids. But they are not telling the government that they have grabbed tax amounts by force that would be followed by litigation and return/adjustment of the amounts collected by force.
In a recent incident, the field staff of Regional Tax Office (RTO) Lahore along with private guards and TV channels raided a hotel in search of offices of an apartment scheme. The field staff kept knocking each and every door of the hotel in search of the required office that led to harassment to guests in the hotel. Meanwhile, TV channels flashed news that a raid has been conducted on a hotel.
It may be noted that the field staff of RTO was in search of the office of a builder who constructed a multi-storey apartment building near Qaddafi Stadium. Raid had been conducted on the presumption that the builder has sold out all the 66 apartments and not sharing sales documents with the department while the builder had sold only 28 apartments only.
Sources said the builder telephoned the finance minister. When he inquired about it, the department prepared a list that the department has collected handsome money due to raids. However, it admitted that the department raided a hotel mistakenly but still this mistake is excusable because of the good performance of the department. The finance minister, said sources, sided with the department. The builder is now approaching the court of law for claiming damages from the department.
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