A Medium Taxpayer Unit (MTU) was hastily inaugurated in Karachi on December 1, 2004 by the Commissioner of Income Tax Southern Region Syed Mohammad Athar Zaidi. According to the establishment of the MTU was the realisation of a 30-year old dream, which will replace the age-old tax assessment procedures. The tax assessment methods to be followed by the MTU would be functional ones as opposed to the present system which is largely based on the discretionary powers of the income tax officers.
It is likely to be converted into a regional income tax office in due course within the parameters of on-going taxation reforms. Now it remains to be seen as to how far the so-called functional methods of assessment are going to make a distinct difference from the existing procedures and methods.
The salaries of officers and staff selected for the MTU are reported to have been doubled in addition to other incentives. This step appears to have been taken to curb the temptation among the staff of the MTU to indulge in corruption and seek bribes and illegal gratification from the potential taxpayers for their tax liabilities.
An important feature of MTU's working, it is claimed, will be that the tax assessee will not be permitted to meet the relevant income tax officer or the staff member dealing with his case.
According to the present arrangement, 6th and 7th floors of the Income Tax Building have been allotted for the MTU and the entire staff will be sitting at the 7th floor, while an elaborate reception office will be maintained at the 6th floor where an assesses will be received by an officer to listen to his grievances and other queries.
The assessee will not meet the assessment officer and staff member at the 7th floor face to face. The officer receiving the assesses at the 6th floor will be expected to inform them of the decisions on their complaints by post.
It may be pointed out here that an MTU is already working in Lahore. The experience and the results of this unit may provide necessary guidelines for the new MTUs in the southern region. The sixth floor of the Income Tax Building in Karachi was reported to be buzzing with construction activity.
The explanation for the premature inauguration of the office was stated to be the deadline fixed by the CBR high-ups.
(It may be questioned when the deadline was December 1, why the entire office premises along with necessary furniture and other arrangements for the staff were not completed, without which the inauguration was a meaningless event).
The proposed MTU being one of the five similar units to start functioning in the southern region with effect from December 31, 2004 would take up the income tax assessment of all the 177,913 non-corporate taxpayers in Karachi. These taxpayers will include salaried persons, contractors, forex dealers, dairy farmers, estate agents, transporters, co-operative societies, Race Course betters, non-resident entertainers, doctors, engineers, architects, advocates and chartered accountants.
The territorial concept of the MTU to undertake assessment of potential taxpayers is expected to produce positive results in the detection of those business houses and professional income earners who have managed to stay out of the income tax net so far.
The efforts in this direction should produce better results in the broadening of the tax base with the inclusion of new taxpayers.
The increase in salaries and allowances of the officers and staff to the extent of 100 percent would have to be justified by this unit through achievements not only in terms of increasing number of taxpayers but also in the improvement of administrative efficiency and quick redress of the grievances of taxpayers, specially in the refund of excess tax payments.