Published Date: Mar 4, 2015
Enforcement of tax laws can double revenues: TRC head
ISLAMABAD: Chairman of Tax Reform Commission (TRC) Masood Naqvi Tuesday said that the Federal Board of Revenue’s (FBR) revenue could be doubled by ensuring effective enforcement and compliance of tax laws.
He also proposed that they would convince the multilateral donors such as the IMF and the World Bank for declaring one financial year without holding up refunds amounts and obtaining any advances in order to get clean slate instead of ballooning up revenue figures for achieving the tax collection target.
“One multinational said that Rs5 billion refunds were stuck up with FBR. There was no need to accumulate liabilities for the sake of showing inflated figures,” Naqvi said while addressing National Tax Summit organised by SDPI and OXFAM here on Tuesday.
Giving example of India’s move in their recent budget, Masood Naqvi said that they introduced in their tax laws to confiscate assets equivalent to the property purchased abroad if the money was not transferred outside India through legal channels. He also said that the ‘Benami’ property in case of non-declaration would be confiscated in India.
“Pakistanis have invested for purchasing properties in the UAE and Dubai and what measures we have taken in this regard,” he observed.Former finance minister Dr Hafiz A Pasha said on the occasion that Pakistan was unfortunately nearing towards tax revolt mainly because elites captured the State.
“There has been a decline by 38 percent in the last two years for creating demand by the FBR through audit exercise mainly because the tax base was shrinking massively,” he said and added that the economy had stopped growing and that was why the sales tax on both imports and domestic front was showing negative growth.
Dr Pasha candidly acknowledged that he had failed to bring any improvement for increasing tax-to-GDP ratio. He said that he had introduced Agriculture Income Tax (AIT) in 1997 but the penalty rate was never increased between Rs100 to Rs250 per acres in the last 18 years. The penalty on non-filers of return in case of AIT was being charged at Rs1,000 only.
“There is big snake being every Statutory Regulatory Orders (SROs) on the basis of which rent seeking and benefits were obtained at the cost of national exchequer,” he said adding that there was a need to get rid of SROs culture.
While showing dismal situation, he said that there was no room for reform in this elite culture. He deplored that the FBR took additional revenue measures on income tax side to the tune of Rs144 billion in the budget but the growth of tax collection stood at just 6 percent in the ongoing fiscal year.
“We need big moves where tariff of customs should be brought down drastically and the rate of GST should also be reduced,” he said adding that without fundamental reforms, nothing would be changed.
Former Economic Adviser of Finance Ministry, who is currently serving as principal of Nust Business School mentioned flawed process for the preparation of budget where the budget deficit and expenditures were fixed first and then FBR’s revenue target was finalised which had nothing to do with the ground economic realities.It resulted into revising downward the tax collection target by twice or thrice every year and this year revised target of Rs2,691 billion would be further slashed down, he added.
Source : http://www.thenews.com.pk/Todays-News-2-304972-Enforcement-of-tax-laws-can-double-revenues-TRC-head