TAX SURVEY RESULTS
MASSIVE INCOME TAX EVASION
"We never thought tax evasion was of that high level"—CBR
From SHAMIM AHMED RIZVI,
Aug 21 - 27, 2000
Almost half of the work relating to the initial exercise of tax survey in 13 major cities is yet to be done, the official of Central Board of Revenue (CBR) are more than happy as they have detected massive income tax evasion by those who have declared their assessable income through their tax survey forms.
Scrutiny of the forms already received by the tax authorities reveal that more than half of the taxable income earning population of posh localities of 13 major cities have never filed a tax return, a senior official of the CBR confided with this correspondent adding "we never thought tax evasion was of that high level." In such a situation there should be no problem in adding Rs 100 billion to the national revenues during the current financial year".
The official source informed PAGE that data analysts have started submitting reports, to CBR, on figures being fed into their countrywide system on daily basis from the 13 major cities. These figures indicate that more than 50% of the residents of posh localities are found nowhere on the taxpayers lists. The analysis has been conducted on 25,000 forms as a "sample-indicator" of the tax-culture situation over the past week, on the forms submitted by these residents. The minimum taxable income of a person, is Rs.40,000 per annum, whereas, the names of about 13,000 persons forming the sample have not been found on the Income Tax department's list of registered persons. "To make sure that the analysis produces 100% correct results, we scanned the entire rolls and after double-check it was revealed that 50% have never got themselves enrolled as tax-payers" he said.
People who never got registered as income-taxpayers, include "a substantial number of those who have revealed their incomes far above the minimum taxable income". He refused to give out the number of those who fall in the category of "tax-evaders" with income between Rs.100,000- 500,000 and above, saying, let a larger sample of survey come and we will be able to draw up a category-wise list" for the reporting purposes.
According to CBR figures, 657,748 survey forms have so far been distributed. The forms distributed in business areas were 356,006 and 301,742 in residential areas. Out of it, 102,444 forms were received from the former and 130,118 from the latter sector. Distribution of forms in 90% of the residential areas and 80% in the business areas has been completed. The forms collected/received back by the tax authorities comes to about 28 per cent in case of business area and about 40 per cent from residential areas.
Member income tax, CBR told at press conference in Islamabad last week that these forms, received from firms as well as individuals, showed substantial under-declaration of incomes. The variation came to light when the actual consumption of utilities by individuals and firms was compared to what has been shown on their forms.
"Notices for evasion are being sent to the under-declarant. These notices would be based on utilities bills they have been paying up over the past 12 months and the income tax they have been assessing. There is a huge gap between the income declarable in view of the capacity to pay up such bills and the incomes actually declared", he elaborated.
Variations between declarations and the actual bills acquired from the utilities companies had indicated that there was an incalculable black money, and we had never assessed that there was so much taxable remaind untaxed in the country, he said.
When asked whether the information supplied through survey forms is immuned from probe, he said. "Survey for documentation of economy is being conducted for netting new taxpayers and for detecting under-declaration of stocks, incomes, property and turnover. This is not the tax amnesty scheme under which declarations are being made by the citizens. No immunity is available to tax evaders under the survey". Participating in the press conference member Sales Tax CBR, Sarfraz Khan said Pakistan Revenue Automation Private Limited (PRAL) a department of CBR, has got the entire system and record of WAPDA and gas department to verify the information provided in the forms. Out of the target of distributing one million survey forms, 90 per cent residential and 80 per cent industrial areas have been covered whereas the distribution amongst the traders has also been expedited,' Sarfraz said.
He said the government is in contact with the traders and soon the matters would be settled with them. "The traders associations in Karachi and Lahore are even joining the survey teams for the distribution and recollection of the forms," Sarfraz said. He admitted that in the cities including Peshawar and Sukkur the traders are resisting the distribution of forms on the basis of local issues. Although the repatriation of Afghan national is a national issue in Peshawar the traders are linking receipt of forms with the repatriation of Afghan refugees, Sarfraz said adding that such irritants would be removed soon. He reiterated that the government would restrict itself to the financial year ending on June 30 and would not go beyond 1999 to expand tax net as well as to curb under-filing. "But the NTN holders and new tax payees have to pay due tax and computerized system would detect under-filling". The government's offer of outside audit would continue "in case of audit from outside, the government would pay 50 per cent charges of the approved chartered accountant companies". Sarfraz added that the previous taxation system that was based upon estimate is a gone story now. "None of the CBR officials would be able to make money on the implementation of new taxation system".
On the occasion, the PRAL chief gave a detailed briefing on the system of evaluation for National Tax Survey. He said that PRAL has 1100 officials in its three centres at Karachi, Lahore and Islamabad for recording the data of the forms. "We have a capacity of dealing with 25,000 forms daily as one person can enter and recheck about 50 forms," he said.