Tax officials at the Regional Tax Office have apprehended that tax shortfall may reach to one trillion rupees by the end of current fiscal year. It will still be around Rs700 billion even if the government makes efforts to control the shortfall, they said. It may be noted that the government has set revenue target of Rs4.3 trillion for the current fiscal year.
They said the revenue is registering shortfall despite collecting tax under the amnesty scheme. But still a change in the minimum tax slab, withdrawal of withholding taxes on mobile phone bills and banking transactions has hit the revenue generation initiatives hard, they added.
While admitting that tax reforms of the previous government had benefited a common man, they said the present government is unable to mobilize the work force in the country. They said simple automation cannot answer the ills of tax machinery. Instead, they said, automation has plagued the system as the whole system has been handicapped in a few hands while rest of the workforce is sitting idle.
Furthermore, they pointed out that the government was hesitant in carrying out power projects to make experiments as how tax generation can be enhanced. This trend has crippled the system altogether and tax machinery has failed altogether.
They have expressed doubts over the ability of ministers to understand the tax collection process at the Federal Board of Revenue (FBR), saying that the government has little options to move on. They said the tax system is fragile to the extent that a simple agitation from the traders of market compels the government to withdraw tax machinery from the field. They added that FBR cannot give results without showing its muscles.
They have also criticized the International Monetary Fund (IMF), which demands that the FBR officials should not interact with taxpayers within its jurisdiction. They said such a system can be successful in the USA, not Pakistan. Also, the IMF believes that the FBR is overstaff while the officers within the FBR believe that they are short of support staff in the shape of upper division clerks (UDCs) and lower division clerks (LDCs). Resultantly, the pendency of tax cases is mounting with every passing day.
Interestingly, a few circles suggest that the economy would rebound by the start of next fiscal year and the revenue generation would resume its momentum accordingly. However, still a good number of tax experts have expressed their doubts that economy would rebound to the extent that tax generation would resume momentum. They said presence of informal economy has become a big issue for the government. They said tuition centres, doctors and lawyers are operating out of the ambit of tax net and no system exists to check their incomes. This is real issue of tax machinery, they added.