LAHORE: In a brazen display of disregard for the law, taxpayers in Pakistan continued to defy the Federal Excise Act of 2005, despite clear amendments aimed at curbing tax evasion, said sources. They said the controversy centred around Section 3A, introduced through the Finance Act 2007, empowering the federal government to levy special excise duty on locally produced and imported goods.

According to the sources, the legislative journey began with a bill introduced in the National Assembly, passed on June 22, 2007, and ratified by the President on June 30, 2007. The Finance Act 2007 was subsequently published in the official gazette, making Section 3A effective from July 1, 2007.

However, they added, taxpayers remained recalcitrant, refusing to comply with the amended law. They contested the vires of Section 3A and the accompanying notification, issued by the federal government. The dispute landed in the courts, where taxpayers argued that the special excise duty was unconstitutional and excessive.

As the legal battle raged on, said the sources, taxpayers continued to flout the law, evading taxes and undermining the government’s revenue collection efforts. The government, determined to enforce the law, persisted in its efforts to recover the due taxes.

The standoff highlighted the cat-and-mouse game between taxpayers and tax authorities. While the government sought to plug revenue loopholes, taxpayers exploited every available loophole to avoid paying their fair share.

The sources said the implications were far-reaching, which included reduction in government revenue, inequitable distribution of tax burden, and encouragement to tax evasion.

They added that the episode underscored the need for stricter tax compliance measures and increased public awareness about the importance of contributing to the national exchequer.

They have further emphasized that taxpayers must respect the law and contribute to national revenue. Moreover, they said, the government must ensure effective tax administration and enforcement and continuous legislative refinements are necessary to address emerging tax evasion tactics.

According to some tax practitioners, the saga served as a reminder that tax compliance is crucial for a nation’s economic well-being, and disregard for the law would only perpetuate an unjust system.

Copyright Business Recorder, 2024