FBR not ‘rewarding’ taxpayers for timely paying due taxes: report

ISLAMABAD: A taxpayer’s survey of the Federal Board of Revenue (FBR) revealed that the FBR is not “encouraging” and “rewarding” taxpayers who are timely paying their due taxes in the national kitty.

This has been stated in the FBR report (Stakeholder Engagement Plan) issued under the World Bank funded Pakistan Raises Revenue Project (PRRP).

The latest report of the FBR prepared in consultation with the WB described that, “there are several interested or indirect stakeholders for the said project. Information from the initial interviews conducted was informative and shed light on their relationship with the FBR.

A select set of questions were posed to elicit responses on whether they considered themselves important stakeholders, their level of influence and support for the project objectives, and the level of engagement they would like to have during the 5-year project life.”

The report said that the Pakistan has historically a low number of taxpayers in general, except for the salaried employees of medium to large-scale companies, which have been in the tax net. These included the entire public infrastructure (government-run and owned departments), state-owned enterprises, international organizations, and those Pakistani businesses whose products and services are visible (either FMCGs or providers of services such as finance, construction, health, etc.).

Whenever there has been drive-by previous governments and revenue authorities to broaden the tax base, there has been vehement resistance and reluctance by non-taxpaying businesses (such as traders and wholesalers) and the public at large.

The root cause of this reluctance and resistance has been the distrust that prevails within the citizenry on receipt and end-use of their money. Many argue that since the state does not provide quality health, education, security, and other associated services, it foregoes its right to demand taxes.

Others believe that revenue authorities in connivance with producers and large traders, do not submit tax receipts to the exchequers, but pocket it themselves, raising corruption on taxpayers’ money.

The report said that many respondents in the current round of interviews raised this concern and went to the extent of accusing FBR of coming up with new schemes of conning the public at large, where they will take money from citizens and use it by themselves.

Another issue is understanding where taxpayers’ money is being used. Some respondents demanded “expenditure tracking” of the GST that they pay on consumer goods, and on the annual income tax they pay (according to each tax slab). Also, there is confusion on the fundamentals of various types of taxes (such as withholding tax, advance income tax, federal excise duty, GST, VAT, tax on electricity and gas, etc.) and their subsequent applicability.

Some interviewees said the FBR is more concerned with bringing more people into the tax net than “encouraging” and “rewarding” taxpayers who have paid their taxes all their lives and continue to do so, the FBR report added.

Copyright Business Recorder, 2023