Central Board of Revenue Chairman M Abdullah Yusuf has said it is unfortunate that performance of CBR is narrowly linked to revenue targets only, without any regard to the state of the economy, delinquencies of the taxpayers and rudimentary nature of tax culture in the country. In a paper on 'Tax and tariff structure in Pakistan - past experience and future prospects', Yusuf made an overview of federal tax structure, policy changes, tax administration reforms, promoting new tax culture, improvement in audit, human resource management and incentives to promote investment.
He said that the taxation structure of Pakistan has been reviewed in the light of multidimensional tax policy and administrative reforms.
Given the diversity of work process, he said, it is evident that the performance of CBR, as public sector organisation, has improved over the years even though it requires further improvement in several other areas.
He said that it has been highlighted that tax administration remains a relatively neglected area as the revenue organization has continued to function with an outmoded and inefficient structure for a long time. However, things have started to take new shape with the initiation of a wide-ranging reform process. "It is intended to vastly improve tax administration by changing the organisational structure from type of tax to functional lines."
President of the Income Tax Bar Association, Karachi, Yunus Rizwani, and General Secretary Ali Rahim, commenting on the views of CBR Chairman told Business Recorder on Wednesday that Income Tax Ordinance 2001 has introduced many policy changes which are self-regulatory and self-explanatory and are aimed at liberating the tax administration from the 'extra control' of CBR.
They said that across the board self-assessment, limited selection of cases for detailed audit and reintroduction of books of accounts are some of the steps in the right direction.
They, however, said that the taxpayers would need some more time before adjusting to these guidelines, especially for maintaining books of accounts.
In their view, maintenance of books of accounts would lead to proper documentation of tax record, but before it takes place the CBR would continue to look at some of the taxpayers as 'delinquents', which is not appropriate.
They said that small taxpayers should be given some more time to comply with this and many other requirement of the IT Ordinance 2001. At the initial stages new and small taxpayers are finding it a bit regressive.
However, the CBR Chairman maintained that the taxation system is relatively less regressive. It is growth-promoting in the sense that income and consumption are being taxed, rather than investment and production. The share of income and corporate taxes and sales tax has jumped to over 70 percent from 33 percent in the early 1990s, he said.