Writing about the taxman can be injurious to your health; even if it is all praise, because the taxman, like the grim reaper, taxes first and asks questions later - and he is shrewd enough to know that any praise most definitely must be satire. After all how do you even begin to praise the guy who takes your hard earned money, without giving anything in return?
So Dear Readers, do appreciate that the writer will pay a heavy cost for this adventure - I wonder if insanity is a good defence for getting a tax exemption. Come to think of it, I seem to be playing with fire for the last three weeks! Oh well, all for freedom of speech- the irony is that for me, free speech is such a pain in the nether regions.
Anyways, the catalyst for this particular write-up was FBR Biannual Review January 2019-20. Admittedly, I am seriously lagging behind on my stuff to read list, however in this case the first impression was, they should at least date these reports!
More importantly, why is it a biannual report and not a monthly affair? And finally, why is the information therein so basic? For someone who has struggled and continues to struggle with opaque and cloudy data and records of the informal economy, the taxman should rationally be more forthcoming when it comes to its own performance information.
Seemingly, PRAL is not doing a bang up job? Pakistan Revenue Automation (Private) Limited, a subsidiary of FBR, was established for migrating the taxman into the information age. On the home page of its website, PRAL proudly asserts, "Over more than two decades of services, PRAL has gained valuable experience of increasing efficiency and efficacy of tax and revenue agencies through use of latest Information and Communication Technologies with Business Process Improvement / Re-engineering".
I am not an IT guy, but two decades seems to be more than sufficient time to have automated the revenue collection function, twice over. This particular view is based upon the great things NADRA achieved in the given time frame - as of now all information about economic activities and tax collected thereon, should be a click away; or is it?
If you do a random walk around the PRAL website, you find that they seem to have provided automation services for Inland Revenue System, Sales tax and custom, amongst others, and have developed "Complete solution for sales tax on services" and "fully integrated custom clearance system".
At this point, it may not be wrong to say that the continuing technology blitzkrieg will be corruptions nemesis- with everything eventually becoming easily traceable and auditable in real time, it will within the coming decade become rather difficult, if not altogether impossible, to operate in the informal economy or hold black moolah. Try as they may to delay the advent of information age in the developing world, the writing is on the wall.
Returning to the real world, "complete solution" and "fully integrated" give the impression that all and every kind of sales tax, and all customs duty on each and every imported good, barring smuggling, has been collected. Further, depending on the quality of the software and systems, FBR now has the capacity to precisely predict the amount of sales tax and custom duty that needs to be collected given the related economic activity, and that the said taxes were indeed collected and reconciled with the underlying transactions.
Accordingly, if you think about it, FBR should be able to prepare budgets with a high degree of accuracy, and well a lot more comes to mind- but all that is obviously not the case.
In a nutshell, the Government would be better off trying to remove impediments to automation of FBR functions, and to troubleshoot all that hampers implementing a state of the art data collection and analysis system, rather than thinking up more things to tax.
Okay, this was supposed to be a write-up on the Biannual report, and well I seemed to have digressed royally- but frankly if we are ever going to get to the appropriate tax to GDP ratio, irrespective of personal views on that ratio, data mining and analytics constitute the one and only option going forward.
Getting back to the biannual report, albeit in the limited space we have left, the key take away is that out of the net collection of Rs 1,523 billion, only Rs 60 billion was collected on demand- a meagre 3.9%. And the explanation given needs an explanation, "This sharp decline can be attributed to administrative restraint on collection through active enforcement measures which resulted in decline in collection from arrear and current demand". No idea what that means! Perhaps administrative restraint refers to lockdowns! Irrespective, even if you add another Rs 40 billion, it wouldn't make a huge difference- the suggestion to restrict the powers of the taxman to go back to the future, in order to facilitate the documentation of the informal economy needs serious consideration.
Given the above, it makes all the more sense for FBR to move towards full automation, and fast!
Hopefully will continue with the discussion on the taxman, for the moment, it would appear that PRAL seems to be the future of the taxman!
(The writer is a chartered accountant based in Islamabad. Email: [email protected]. The views expressed in this article are personal. The views are not necessarily those of the newspaper)
Copyright Business Recorder, 2020
Comments
Comments are closed.