Tax collection growth: Automation only solution: FBR chairman

Chairman Federal Board of Revenue (FBR) Shabbar Zaidi on Tuesday described the existing taxation system as "extortionist" and said the FBR is collecting 90 percent taxes in the shape of withholding taxes and deduction at source while only 5 to 10 percent is coming through voluntary compliance. Addressing All Pakistan Chambers Presidents Conclave here, Chairman FBR Shabbar Zaidi said that total wholesale and retail traders are contributing Rs 9 billion from all over the country.

He said that Sundar Industrial Estate, which is not exempted from registration of sales tax, is contributing 'very negligible' amount to the national kitty.

He was of the view that voluntary tax system has failed to deliver and such system cannot run on a sustained basis. Secondly, the FBR is collecting 45 percent on imports. "The FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimize human interaction as much as possible," he added.

He said the FBR so far collected Rs 2,085 billion in first half (July-Dec) of 2019-20 and they are confident that it depicts the true picture on account of actual tax collection as much as possible. Last year, the FBR had collected Rs 70 to 80 billion in the form of advance taxes.

Without mentioning the name of the country, he stated that the FBR is facing one major problem on customs side as there is still difference of $1.7 billion in bilateral trade figure, which shows that under-invoicing is still continuing that once stood in the range of $6 billion per annum.

He said it is not possible for any human to check 8,000 containers daily so the solution is the installation of the latest scanners. "We need to place automation as there is no other solution," he added.

The chairman FBR said that there are four major sectors contributing to the country's GDP growth and economy including manufacturing, agriculture, services and retail trade and wholesale. There should have been 25 percent burden on each of these four sectors but in Pakistan manufacturing sector is bearing this burden by contributing 70 percent to national kitty. This tax burden, he said, is resulting into de-industrialization.

Ideally, he said the tax burden should have distributed equally on four major contributors of the GDP growth. He said that the government is the partner of 25 percent in the shape of collection of taxes from the private businesses.

He said that the solution lies in automation as the FBR would make efforts to slash down the number of audits. "We need faceless FBR that is required to be converted into 'Friendly Board of Revenue'", he added.

He said that there are parking lots of black money and untaxed and grey money is parked into real estate. "There should be ownership of chambers of commerce and industries and there must be demand of the business community to automate the FBR," he added.