SCOPE OF EXPANDING TAX NETWORK
RTO COLLECTS RS. 38.968 BN IN FIRST HALF
TARIQ AHMED SAEEDI (firstname.lastname@example.org)
Feb 18 - 24, 2008
The closing of mid fiscal year 2007-08 has swelled the revenue statistics of regional tax collector in spite of abysmally low number of taxpayers, touching the figure of little beyond 0.7 million that excludes 696 cases filed in the Large Tax Unit, Regional Tax Office, Karachi. Out of almost 20,000 companies operating in and around the city, the pathetic record of cases transpire transparently tax evasiveness, curb on which could have generated billions of rupees in revenue and would have halved the tax loads on salaried and non salaried individuals. According to a report available with the PAGE disclosed that RTO, Karachi collected Rs. 38.968 billion revenue from the salaried and non-salaried taxpayers during the period of July and December 2007 as compared to Rs. 36.687 billion in the corresponding period of the last fiscal year. However an addition of around Rs. 2 billion was recorded according to the results of two quarters, July to September and October to December, the number of refunds on taxes gradually plummeted to Rs. 1.738 billion during the aforesaid period from Rs. 2.161 billion in the same period last year. This may be considered one the reasons of increment in direct tax revenue. Along with, non-refundable taxes withheld on services kept the graph of revenue up. Previously taxation applied on services sector is subject to refund, but after the in-process restructuring of revenue collection, renamed central board of revenue to federal board of revenue, taxes withheld on services have been non-refundable, said Sajidullah Siddiqui, Additional Commissioner Headquarter, RTO, Karachi. He said the tax revenue collection figure of the first half of the fiscal year 2007-08 would have increased by another Rs. 2 billion, had it been collected duly in the month of December. Because of the following month of January realized the recovery owing to un-gazetted off working days in the preceding month.
SALARIED AND NON-SALARIED TAXPAYERS
During the aforesaid period, only 725,849 returns were filed out of which, 520,903 belonged to salaried individuals. That is self evident of the marvellous contribution of salaried taxpayers in overall direct tax collection. While talking to PAGE, DG RTO, Karachi, Asrar Rauof expressed his satisfaction over the mid fiscal year tax revenue collection insofar as salaried and non-salaried individuals are concerned. He said this is quite satisfactory that tax revenue registered an increase. According to an official of information processing division in the income tax house, difference in tax returns and collection was detected in the second quarter of this fiscal year. He further said actual collection was less than the returns filed and officials were probing on. While disagreeing to any such anomaly, Asrar Rauof underlined extension in tax collection date by government initially to mid and then to end of January may have caused the difference. Whatever may be the reason, the fact is that model taxpayers' unit is collecting direct tax receipts from a very small group of taxpayers, "majority of them could not escape tax even if they desire due to drawing on salaries", pointed out Sajidullah. According to him, tax population of at least one million across the city ignores tax payment willingly. That is too formed by non-salaried individuals. A commissioner of enforcement, Amjad Iqbal, while talking to this scribe, said the revenue collected by the government through direct or indirect tax is to spend on public sector development of the nation. The expenditure does not necessarily reflect in physical developments. Sometimes, non-physical progress put on public welfares. Also, this does not limit to construction of roads and highways. He said people swerve off tax payment as they might not be satisfied with the public expenditures. "But, correction in approach is must." He believed that until mindset of people would not shift to optimistic approach taxable population would not be expanded. Responding to a question, he said, transparency has been improved after technological updates and now tax regime would broaden its scope. Since, the restructuring is in process right now revenue collections are not impressive. He said implementing of tax laws are fairly difficult not only in Pakistan but across the world, requiring sophistication in mechanism and skilled manpower.
PROSPECTS TO TAXABLE POPULATION
It is believed that tax reforms and organizational restructuring would play a vital role in enriching the application of tax and enhance the coverage of tax to a wider taxable population. The restructuring process in revenue collection aimed at removing the impediments and bottlenecks of tax collection. Functional authority has now been given to respective commissioner in order to enrich specialization. In case of direct taxes, revenue is collected through five regional commissioners of northern, eastern, central, southern, and corporate across the country. Five model taxpayers' units and two large taxpayers units, each headed by the director general, are also entrusted with the job of collecting direct tax receipts. The indirect taxes (sales tax, federal excise duties, and customs) are collected by 18 collectorates across the country and by two large taxpayers units, located in Karachi and Lahore.
The city of Karachi is entitled as a hub of national industrial activities that contribute 60 to 70 percent in the total revenue of the country. In the above discourse highlighted only the direct taxes of one city, indirect taxes usually paid by large tax payers were not under discussion. Other wise, the large tax payers underwrite more in lieu of indirect taxes. Only total customs duty collection for the month of January 2008 stood at Rs. 12.4 billion as against Rs. 9.6 billion collected in January 2007, registering a growth of 29.1%. Target of customs duty collection for January 2008 was Rs. 10.1 billion. Duty collection in first six months of the current fiscal year was Rs. 61.6 billion as compared to Rs. 60.7 billion collected in the same period of 2006-07. As Additional Commissioner said that 696 cases are nothing in comparison to number of local and multinational companies, most of them manage to evade taxes through "strategizing". The potential is enormous and tax network needs to stretch its disinterested arms over taxable population in course of revenue collection for economic well-being.