Seven-member task force,
headed by former judge of Supreme Court is working to formulate recommendations by Dec 31,
By AMANULLAH BASHAR
August 02 - 08, 1999
Dealing with a series of 48 tax collecting agencies (25 Federal, 15
Provincial and 8 Local) to their satisfaction, is a hectic exercise which requires a great
deal of time and patience.
Our trade and industry, has always been crying against the large number
of tax collecting agencies because they feel that instead of strengthening the revenue
collection, corruption has grown with the increase in number of tax collecting agencies.
They have learnt the art to live with them.
Though in principle, the successive governments in the past had agreed
to consolidate existing tax collecting agencies into five agencies three at federal and
two at provincial levels, however, practically speaking it always remains on the papers
only. Earlier, the government had constituted a high-powered committee comprising the
members from ministry of commerce, ministry of finance and Central Board of Revenue (CBR)
with the task to consolidate the 25 federal taxes into three taxes and 15 provincial taxes
in one compact form and the eight local taxes too in a single tax after looking into all
pros and cons of the deletion process.
The present government which seems to be serious in its intention for
reducing the large number of tax collecting agencies has given the deadline of Dec 31,
1999 to prepare its recommendations for consolidation of 8 industry-related taxes into a
single tax which will be collected through one window operation.
Working in line with the directions given by the Finance Minister Ishaq
Dar in his budget speech on June 12, 1999, a 7-member task force, headed by former Supreme
Court judge Mr. Mohammad Afzal Lone, has started working with a mandate to formulate its
recommendations by December 31, 1999.
TAXES TO BE MERGED
The task force is examining as many as eight laws which required such
levies to be paid. These taxes are including "Employees Old Age Benefit Act
1976", Workers Welfare Fund Ordinance 1972, Companies Profit (Workers Participation)
Act 1972, Workman Compensation Act 1923, Employees Group Insurance Ordinance 1968,
Education of Workers Children Cess Ordinance 1974 and the Excise Duty Minerals Act 1974
are the federal laws. While the Employees Social Security Institution Ordinance 1965 is
the provincial law,
the labour laws which bind industrialists to pay certain taxes as their
contribution to different funds for employees may be repealed and replaced by one
comprehensive legislation aimed at introducing a "One Window" operation for
collection of these levies.
The government will subsequently move the National Assembly for a new
act that will give birth to one labour agency to collect from industrialists and other
employers an amount for the welfare of workers.
The task force, in its first meeting, held after the budget, has
decided to issue a questionnaire to solicit the opinion of all the major trade unions,
particularly the Pakistan Workers Confederation which comprises eight leading labour
federations of the country.
The Finance Division at the Federal level has spelled out a 7-point
term of reference for the task force which includes the examination of the existing labour
laws and levies, identifying difficulties of employers in paying their contribution to a
number of labour agencies and evolving broad outline of a "complete" labour law
to replace the existing ones.
Another area of consideration for the task forces would be to suggest
as to how many of the employees will be required for a single collection agency and where
the surplus staff employed by different agencies could be accommodated. Although the
single agency concept may render a number of employees surplus but will give a great
amount of relief to manufacturing sector from uncalled for hurdles in dealing with all
these agencies separately and help arresting the rampant corruption,, the industrialists
There could be no second opinion that the existing system of collecting
a number of levies under a number of Federal and Provincial laws is highly cumbersome for
the tax payers. A single comprehensive law for collecting one tax from employers may also
help to increase the revenue.
Currently, billions of rupees lying unutilized in different funds
negate the very purpose of collection i.e. the welfare of workers and their children.
Currently, an amount of Rs 60 billion is lying unutilized in different
funds, which includes Rs36 billion in the Employees Old Age Benefit Fund out of which a
monthly pension of Rs435 million is paid to the deserving retired workers. Another amount
of around Rs12 billion is available in Workers Welfare Fund, while Rs3 billion are
reserved for the education of workers' children.
The trade and industry feels that there are certain valid reasons for
failure of the system in developing a tax culture amongst the people. Beside, the
corruption, one of the major factors, was the lack of proper utilization of the funds for
the welfare of the tax payers.