Pakistan’s tax return base expands by 43 percent
By Shams Abbasi
ISLAMABAD – Owing to prudent tax reform of the government, the income tax return filing base has widened by around 43 percent to the record level of 2.5 million filers, as 0.750 million new filers got registered with the system.
Economic experts believe that the country is in dire need to expand its tax-base to bear the expenditures and run the affairs of the state in smooth manner.
In this perspective, the government enhanced the revenue collection target up to Rs5.55 trillion for the current fiscal year (2019-20).
The government has already announced various measures in the federal budget and the Federal Board of the Revenue (FBR) also meticulously worked on strategies to bring maximum number of people into tax net.
“One of the major objectives the board has been following is to make the tax system simpler, understandable and implementable,” Chairman FBR, Shabbar Zaidi told APP.
Zaidi said the board in particular was focusing on reducing human interference in tax system by introducing reforms and promoting automation process for improving effectiveness.
“We want reforms in the board and enhance automation in accordance with the best international practices, not only to provide facilities to tax-filer and taxpayers but also enhance overall collection,” he added.
The FBR aims to bring about automation in about 60 percent operations of the board as per the international standard, saying that automation was top priority of the government, adding that automation reforms would cover the customs and sales tax and all other relevant areas.
The economic experts have underlined the need of equipping the board with modern technologies to fully realize the dream of reforms and automation.
“For reforms and automation, FBR should be equipped with modern technology while its officers and staff should be trained on latest Information technology tools,” Renowned Economist and Former Minister for Finance, Dr Hafeez Pasha told APP.
Dr Pasha emphasized that the government should reduce human interference in the tax system besides ensuring proper documentation of economy to develop a healthy tax system on sustainable grounds and enhance revenue collections.
He was of the view that Computerized National Card (CNIC) should be considered as National Tax Number (NTN), as it gives every detail of the individuals and his lifestyle.
The government is determined to speed up work on bring about rapid the process of automation in Federal Board of Revenue (FBR) at both administration and law side of current tax system.
It is pertinent to mention that the FBR data bank Pakistan Revenue Authority Limited (PRAL) was established in 1993 for providing integrated data sources to the national tax system, how this could not which also not play major role to enhance the automation and increase revenue as its data in four different sectors—Customs, Income Tax, Sales Tax and Federal Excise Duty—was not integrated.
So, there is need that this data is integrated to improve operational performance and check tax evasion, inconsistencies, non declaration and mis-declaration issues.
Experts agree that for enhancing the process of automation, capacity building of FBR staff was imperative to make them familiar with the modern information technology tools for paper less and non human interference tax system.
From yet another dimension, there is need to rationalize direct and indirect taxes as according to the State Bank of Pakistan (SBP) data, the major share in overall country’s revenue is of indirect taxes at 65 % and 35 % in form of indirect taxes in last 10 years, highlighting the importance of improving tax system.