Federal Tax Ombudsman (FTO), Dr Muhammad Shoaib Suddle, has said that the country can collect revenue to the tune of Rs 2700 billion if the tax system was streamlined. Addressing members of Korangi Association of Trade and Industry (KATI) here on Tuesday, Suddle said that achieving 13.8 percent tax to GDP ratio was only possible when the colonial system of taxation was changed.
"We are still living in colonial system that's why the country is far behind in tax collection as compared to the rest of the world," he opined. Suddle said that if the taxation system would be reformed, the country would not require any foreign aid and it would easily generate additional revenue to the tune of Rs 800 billion.
To a question, he said FTO is a tenure post and only supreme judicial council can remove FTO during the tenure. Regarding FTO powers to take suo motu action, he said that FTO had powers to take action suo motu action. Suddle said that in 2011, the FTO received 1,390 individual taxpayers' complaints of which 706 or 50.80 percent were pertaining to income tax, 349 or 25.10 percent customs, 328 or 23.60 percent sales tax, and 7 or 0.50 percent to Federal Excise Duty.
Of these, 1,218 or 87.63 percent complaints were decided by December 31, 2011. Of the decided complaints, 1,053 or 86.45 percent ended up in favour of taxpayers. Aggrieved taxpayers were able to get refunds of over Rs 7.89 billion due to hectic efforts of the FTO office during 2011 and 760 major cases were implemented by the Federal Board of Revenue (FBR) during this period.
Dr Suddle said that the year 2011 has been a historic year in several respects for the Pakistan FTO office. The exceptional achievements of the FTO have added new milestones to its history. In 2011, a sum of Rs 7.89 billion had got refunded to the taxpayers as compared to Rs 7.08 billion during 2010. This included refunds amounting to Rs 606 million in 455 income tax cases, Rs 570 million in 107 sales tax cases, and Rs 81 million in 15 customs cases. The highest amount of refund issued in a single income tax case, sales tax case and customs case was Rs 143.31 million, Rs 143.7 million and Rs 401.09 million, respectively. The taxpayers also received a sum of Rs 6.16 million in compensation for delayed payment of refunds in 81 cases.
He informed that the volume of smuggling through Afghanistan bound cargo had been reduced to 40 percent and 4,000 out of 10,000 containers were being misappropriated and that too could be eliminated after reforms in the system. He added that exchequer was now earning Rs 1 billion per month against duty from these containers. Dr Suddle informed that about 25,000 cases decided by the FTO were pending for refunds due to the flawed system. To a question that what would be the action if the decision of FTO is not implemented, he said contempt proceeding would be initiated against respondents.
He said that the department received around 1,500 complaints annually and the period of disposal of the cases has been reduced to only 60 days which is a record. He said, "Our target is to clear all the filed complaints, so that we are left with complaints that are less than three-month old. We have also set a target of clearing them within 60 days." He informed that almost 85 percent of the decided cases were in favour of the applicants while in rest of the world the situation is otherwise.
He said it shows the level of maladministration in the system. "We have achieved the milestone of clearing all backlog of the previous cases," he added. To a point raised by President All Karachi Industrial Alliance, Mian Zahid Hussain, he said that FTO office has advised the FBR not to seize accounts of the tax payers unilaterally and without giving prior notice to the tax payers.
He further said that issue of harassment by the tax department would also be addressed. Shoib said that he would consider taking one of KATI's members in the Advisory Council of FTO. He invited KATI's chairman and Mian Zahid Hussain to hold meeting with him once a month.
Speaking on the occasion, Mian Zahid Hussain said that FTO office was doing a commendable job to provide relief to the aggrieved taxpayers. He drew FTO attention towards the harassment of taxpayers by the tax department by issuing notices without giving chance of hearing to them.
He requested the FTO to also take notice of lodging FIRs against taxpayers by the FBR without any system or criteria. He said that harassment of taxpayers is creating panic among them and the situation would encourage them to get away with tax net. He asked the FTO to appoint a monitoring committee which should monitor the system of FBR or appoint someone from KATI as member Advisory Committee FTO.
Chairman KATI Ehtesham Uddin in his welcome address said that over 80 percent cases decided by the FTO showed that Pakistan's tax system was not working properly and the taxpayers were being harassed instead of being encouraged. He said that FTO was playing a vital role in providing relief to the taxpayers.
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