Apr 2 - 8, 20

Talking informally to the newspersons at a public function in Islamabad last week, the newly appointed Chairman Federal Board of Revenue (FBR), Mumtaz Haider Rizvi, said that they have devised various plans to increase the revenue collection through administrative measures and were working hard on them in a coordinated manner to achieve the ambitious revenue collection target of Rs1952 billion for the fiscal 2011-12.

He was confident that the FBR would be able to achieve the goal. Sources told this scribe that Mr. Rizvi had held a series of meetings with senior officials of the FBR at Karachi, Lahore, and Islamabad to strengthen their efforts and remove the hurdles, if any, to ensure that the revenue collection targets were achieved well in time.

He had a series of meetings with the newly established "think-tanks" established at various stations to devise ways and means to enhance revenue generation and its timely collection in Pakistan.

As a part of these efforts, the FBR chief inaugurated the "Trekker system" launched by the intelligence and investigation wing of the FBR Lahore. The newly developed software has been launched to provide technical support for broadening the tax base (BTB) and enhancing revenue collection. It was launched during a training workshop titled "Inauguration of Trekker Work Flow and MIS/Hands on Training", at Directorate of Training, Lahore. The Directorate General of Intelligence and Investigation (Inland Revenue) organized this training for concerned officers from all regional tax offices.

Speaking on the occasion, Chairman FBR stressed upon the field formations to work hard and come up to expectation of the nation by achieving the revenue collection target of Rs1952 billion for the current financial year. He reiterated his full support in every possible way for facilitation of field formations to reach the desired goals. He lauded the efforts directorate of intelligence and investigation in streamlining the processing of new unregistered cases through workflow module of Trekker.

According to the FBR plan, the biggest efforts will be made towards withholding tax audits where, it is believed, there is a lot of pilferage. The withholding tax is an area where withholding agents deduct taxes from individuals and companies but do not deposit them into the kitty of the FBR.

The FBR officials believe that through a tight audit of withholding tax collection, they would be able to collect additional about Rs20 to 22 billion by June end this year. Cash withdrawal from the banks is a main example in this regard, as the tax is deducted but certain private banks, in many cases, do not fully pass it on to the FBR. "The FBR high- ups are working on it," an insider confided to this scribe.

The tax authorities have collected Rs1,122 billion during the first eight months (July-Feb) of the current fiscal and they require to collect Rs830 billion more during the remaining four months (March to June) to materialize its target of Rs1952 billion.

Through its exercise to identify non-filers to the tune of 487,000 out of which 47,000 non-filers have filed their returns in response to the notices by the tax authorities. So far, the assessment has been finalized in over 30,000 cases and as a result demand of Rs9 billion has been generated. The FBR has also planned to ensure recovery of illegal input adjustments of sales tax and hopes to recover additional revenue of over eight billion rupees.

The realization of this target of Rs1952 billion would mean an increase of over 25 percent in revenue collection if compared to previous year (2010-11) which is by any standard a commendable performance. This rate of growth is being described as the highest in the region. According to a study conducted by the research wing of the FBR which compiled the data of growth in tax collection in regional countries including India, Hong Kong, Singapore, Malaysia, Turkey and Bangladesh, after Pakistan with 25 percent, India was the second with 20 percent growth. Other countries in the region showed nominal growth.

Experts, however, draw another conclusion from this commendable increase in revenues through some administrative measures by the FBR. According to them, it also indicates the huge potential in the field of revenue generation in Pakistan. Despite present increase of over 25 percent in revenues, the tax to GDP ratio-presently below 10 percent-is the lowest in the world including the region with an average of 17 percent .What is more worrying is the fact that while this ratio is rising around the world, it is falling in Pakistan where it has come down from 13 per cent in the year 2004-5 to less than 10 per cent in 2010-11.

We must improve it to at least 15 per cent to generate revenues enough to meet our normal expenses. The tax treatment of income must be uniform and non-discriminatory without regard of its origin. There should be no exemption in taxes on income and consumption except for income of charitable trust or consumption of foodstuff.

All other type of income including income on agriculture should be equitably taxed besides dealing with an iron hand with all types of tax evaders.

Imposition of tax on agricultural sector or farm income has been an issue since inception of Pakistan, but grouping amongst the feudal lords, civil military bureaucrats have successfully kept these incomes out of trajectory of taxation mechanism.

In this respect, India and China remained fortunate as both countries disallowed their citizens to keep agricultural land beyond a specific limit through well-planned land reforms program and hence eliminated feudalism once and for all from their respective countries. But, in Pakistan every voice demanding land reforms or imposition of agriculture tax is muted by force or other tactics.