Tax experts have expressed hope that the new government of Pakistan Tehreek-e-Insaf (PTI) will take measures to increase the number of income tax returns under the reform of Federal Board of Revenue (FBR) drive. Talking to Business Recorder, they also stressed the government to reform the refund system either in case of income tax or sales tax.
Furthermore, they have also demanded ending of exemptions and punitive measures in tax collection as such initiatives slow down the business activity. Taxing various taxpayers from professions with multiple potential should also be the focus of new government under its tax collection drive, they added.
Tax experts are of the view that the new government should ensure removal of system inefficiencies, besides the corrupt practices, as it adds to the cost of doing business. They have mentioned that already taxing the bank transactions and denial registration of new vehicles to those who do not file returns has already affected the business environment negatively.
According to these circles, maintaining of cash register by the traders should be made compulsory and the new government should also tax the online trading as it carries huge revenue potential under the fast changing business environment.
Meanwhile, the FBR sources have pointed out that the government is likely to divide it into two separate bodies, management, and policy wings in order to expand its areas of activities.
Reforms in the FBR have been an old exercise being hatched out by different governments. So far, a number of studies have been carried out, which start from Shahid Hussain Task Force, leading to TARP Reform Document and changes made as per agreement with the International Monetary Fund (IMF) but they were hardly implemented.
According to sources, the new government is likely to invite a private sector figure to take charge as next Chairman FBR and help would be sought from private institutions to bring reforms in the FBR. Meanwhile, media reports have tipped names of Tasneem Rehman and Babar Sultan as next Chairman FBR. However, no such decision has been made till the filing of this report.
Media reports further suggest that the FBR has a workforce of about 30,000 personnel and more than 100 officers in BS-21 and a dozen in BS-22. The FBR maintains a huge organisation but ends up collecting just 10 per cent of the GDP. There is a general perception that the FBR collects 90 per cent of its revenue from over 100 main corporate entities. Out of the population of 220 million, only 0.1 million pay more than Rs 0.1 million and another Rs0.4 million taxpayers make minor payments.
They said the reform process should be taxpayer friendly and aiming at reduction in the tax rate to attract more and more people to the tax net. They have also demanded removal of presumptive tax on various industrial sectors like turnover tax and withholding tax and urged upon the government to revert to normal taxes. They have also sought reforms in the Securities & Exchange Commission of Pakistan (SECP) to streamline business processes in Pakistan.