Federal Board of Revenue (FBR) Member Inland Revenue Shahid Hussain Asad on Wednesday floated a new proposal to generate additional revenue from the rich persons by collecting some extra income tax on consumption of above 1,000 units of electricity on monthly basis.
During the second day of the review of the Finance Bill (2012-2013) the Senate Standing Committee on Finance at Parliament House, top tax manager requested the Senators to consider the proposal for charging extra income tax from persons, who can afford to use air conditioners and consuming electricity above 1,000 units per month. The parliamentarians should consider imposition of extra income tax on elite class which can afford to use air conditioners on regular basis. These persons have the capacity to make expenditure on paying huge amount of utility bills and the same would not face any problem in payment of some extra amount of income tax. The proposal is to impose additional income tax on the consumers of electricity above 1,000 units per month. Such consumers would mostly cover rich persons having air conditioners at their residential places and have the capacity to pay.
Showing full commitment to bring rich persons into the tax net, FBR Member IR was confident that the additional amount of income tax should only be applicable on rich persons who are already spending huge amount on utilisation of air conditioners. These persons can afford expenditure on electricity. "The persons who can spend more should also pay more taxes. We have to take some measures to generate additional revenue from the persons making huge expenditure but paying meager amount of taxes," he added.
Few senators were of the view that it would not be appropriate to impose additional income tax on consumption of over 1,000 unit power per month due to election year. The new or additional taxation cannot be done during the election year, they added.
Giving rationale behind the proposal, Shahid Hussain Asad insisted that the senators should consider such taxation measure for generating additional revenue from the rich people. If the FBR propose imposition of Special Excise Duty or additional Federal Excise Duty on the air conditioners, it would be a one-time levy and would not serve the purpose. The intention is to impose additional tax on monthly basis from the consumers of air conditioners having the capacity to pay higher amount of tax. In case of Special Excise Duty or additional Federal Excise Duty on the air conditioners, it would not serve the purpose of regular collection of additional taxes from the elite class.
When we talk about tax gap of Rs 500 billion, there is a need to collect more taxes from those making huge amount of expenditures. The persons have the capacity to make expenditures must be subjected to higher rate of taxes, FBR Member IR said.
Shahid Hussain Asad further proposed that the government should have the right to purchase assets on payment of additional amount of 10 percent over and above the declared amount of assets. If a person has declared a specified value of an asset, the government should have the first right of purchase such assets from the owner.
To a question on the abolition of the Universal Self-Assessment Scheme (USAS), FBR Member IR said that all modern tax administrations have adopted the system of the USAS to end interaction between the tax collectors and taxpayers. The USAS is backed by audit of selected percentage of the cases as deterrence. We have to move towards documentation so that the people should not have any room for concealment of income. If the salaried class is paying the due amount of taxes, it is only due to the accurate system of the deduction of tax from the salaried class. If the same kind of tax deduction procedure has been placed for business individuals, the concealment of income could be checked by other categories of taxpayers.