Tax base boost task: RRMC recommends deployment of at least 30pc of FBR workforce

ISLAMABAD: The Reforms and Revenue Mobilisation Commission (RRMC) has strongly recommended the Federal Board of Revenue (FBR) to deploy at least 30 percent of its workforce on the institutional task of broadening of the tax base.

The RRMC, in its recommendations to the Ministry of Finance, stated that there are about 48,000 villages and about 7,000 of these villages cover 80 percent of the urban population and 50 percent consumption and the FBR does not have a noticeable presence in these areas.

The FBR should set up commission rates in peri-urban areas to enhance untapped tax revenue.

There is no mapping of business establishments or industrial set-up available with the FBR.

The provision of section 114 of the Income Tax Ordinance, 2001, is a comprehensive section which makes it mandatory for persons listed in the said section to file their tax returns.

There is a near absence of data of residential units of over 2,000 sq feet or immoveable property with the land area of 500 sq yds or more, or list of professionals as listed in section 114(IX) of the Income Tax Ordinance, 2001, who are required to file tax returns. Hence, it becomes a question of lack of willingness on the part of the FBR to broaden the tax base by enforcing the law. The graphical data below would give a fair idea about the scale of tax non-compliance and low tax-to-GDP ratio in the country.

Recognising that the FBR does not have any mapping system that has geo-tagged commercial enterprise, RRMC initiated a discussion with the largest mapping enterprise in the country (Trakker), which has around three million commercial enterprise geo-tagged/map to provide the mapping data to the FBR gratis.

In national interest, they have agreed to provide data gratis to the FBR and even train key personnel of the FBR in data usage at their own cost. Broadening of the tax base cannot be a side activity of the FBR confined to a small number of staff working in a silo.

This activity has to be a serious and a committed effort of the entire institution. The RRMC is of the firm opinion, that for the next three years, the FBR should deploy at least 30 per cent of its workforce on the institutional task of broadening of the tax base in an organised and sustained manner. It should be an institutional commitment and the RRMC is willing and prepared to be a dialoguing partner in this very important task.

The RRMC stated that outsourcing such activities to specialised organisations with necessary expertise and resources may result in more efficient and effective tax revenue collection by identifying tax evaders and non-filers.

The FBR should make an institutional commitment to increase the tax base and treat this task as mission critical for the nation and FBR.

The FBR should take the lead and on an urgent basis with other government organisations and stakeholders agree on a common data structure/format of reporting so that heterogeneous data shared is seamlessly utilised and analysed.

The FBR should use mapping data to broaden the tax base in an organised manner.

The directorate general (BTB) should be supported by giving him more staff and equipment necessary to execute the plan to expand the tax net. He should also be supported to get the data he needs to identify more potential taxpayers.

To assist new taxpayers, the FBR should introduce Self Employed Tax Preparer Scheme (details were prepared by TRC and are part of the report and same can be updated. This on the one hand will help in broadening the tax base and at the same time, provide self-employment opportunity to around 50,000 educated youths.

Copyright Business Recorder, 2023