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FBR struggles to broaden tax base

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Integrates only 1,900 retail machines with tax system in three months



The government could integrate hardly 1,900 new sales machines with the tax system in about three months and it received just one million income tax returns with only five days left in the returns’ deadline, underscoring that the tax broadening campaign is not yielding results.
The government has already missed deadlines to launch a lottery scheme for taxpayers by August 15 and issue licenses to information technology companies to promote and facilitate business integration through point of sales initiative. The failure to provide an enabling environment is proving costly.
As compared to around 3.1 million income tax returns filed for the last tax year, so far the Federal Board of Revenue (FBR) has received around one million returns, according to sources in the FBR. FBR Chairman Dr Mohammad Ashfaq Ahmad has shown resolve that he would not give an extension in the deadline -which is September 30.
Unlike last fiscal year when the FBR had not timely uploaded the return forms and had to give extension till December 8 to give 90 mandatory days to taxpayers, this time the FBR efficiently uploaded the return. The legal requirement of giving taxpayers three months for filing the return has been duly met, the sources said.
The government has taken numerous measures to convince and compel the people to file their returns but so far all its efforts have failed to provide results. It seems the carrot and stick policy is not working either.
The government had also claimed that it had identified 7.2 million people on the basis of their withholding tax payments. But hardly 350,000 of them could be brought in the tax net.
The sources said that the results of the business integration campaign were also not different.
The data showed that the number of points of sales integrated with the FBR increased to just over 13,700. The figure was 11,830 in June this year. This showed around 1,900 more machines could be integrated during almost the first three months of the current fiscal year. The number of new retailers integrated with the FBR in three months was just 642, bringing total integrated retailers to 1,470 so far.
The FBR has also not been able to create a complete enabling environment to integrate businesses with the tax system despite it being the topmost priority of Finance Minister Shaukat Tarin after the Kamyab Pakistan Programme. Two former associates of Tarin were also helping the FBR in the business integration campaign but the results were so far dismal.
The integration of 500,000 POS with the FBR is also the single largest initiative that Tarin had announced in his budget speech to broaden the tax base. However, in June this year, the FBR had informed the finance minister that the target of configuring 500,000 points of sales at retail shops with a tax database and collecting additional Rs100 billion worth revenue were unrealistic.
The sources said that there was no huge tax potential from the drive and the FBR at best can collect additional Rs15 billion from the POS initiative in the current fiscal year as against the budgeted figure of Rs50 billion and minister’s desire to generate Rs100 billion.
The first almost three months’ results prove that the FBR assessment was correct.
The government was required to issue licenses to information technology firms for configuration of point of sales. These licenses had to be issued by the end of August but the FBR missed the deadline and has put the process on hold.
The finance minister wanted to launch a lottery scheme to give up to Rs1.5 million maximum per head award every month for those who would buy goods from POS integrated shops and then share their receipts with the FBR. In three months, the government could not launch a simple scheme despite charging Rs1 per sale invoice from the customers.
The sources said that the finance minister also wanted to integrate about 65,000 credit and debit card machines that the banks gave to the retailers. This desire too remained unfulfilled after few businessmen in Karachi preferred to return the machines to the banks instead of registering with the FBR, said the sources.
According to the government plan, the online marketplaces will also be integrated with the FBR’s point of sale system. Similarly, a retailer who has acquired a point of sale for accepting payment through debit or credit cards from banking companies or any other digital payment service that is provided by the central bank will also integrate with the FBR system.
The Express Tribune had sent questions to the new FBR spokesman Dr Asad Tahir Jappa about reasons behind missing deadline to launch the lottery scheme; slow pace of POS integration and whether Aneeq Khawar-led integration committee was proving effective to integrate businesses with FBR system.
The replies were awaited till the filing of the story.
The fate of Tarin has also become uncertain due to a delay in announcing a plan by Prime Minister Imran Khan to get him elected as a senator. The sources said that Tarin had a one-on-one meeting with the PM on Friday.
Prime Minister Imran Khan had appointed Tarin as finance minister in April this year for a period of six months, which is going to expire on October 15. By that time, the PM has to get him elected or Tarin will cease to exist as finance minister. The premier has not yet announced a plan to elect Tarin as senator and it will require at least 23 days to elect him from the date a seat is vacated.
According to a decision by the Islamabad High Court, an adviser to the PM cannot chair a cabinet committee meeting. For smooth functioning of the official business of the Economic Coordination Committee, Tarin has to be elected as senator and take oath as the finance minister.





Tarin promised 5 lac machine in this FY. He is going dam good pace and another Tarin promise will be fulfilled.
 

blueazure

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i wont be surprised if govt resorts to out right begging the people in a few years

#gofundme
#kickstarter
#VC'sfundgovt
 

ARMalik

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Tax base can only be increased if you provide more jobs to people. There is a very high percentage of unemployment in Pakistan, I would say about 50% of the Youth are unemployed !

Honestly, I do not see Pakistan having an effective tax system for many decades to come. So the only way forward is to abolish individual taxes, and increase sales tax/GST on food items (minus wheat, rice and sugar) and other consumables, and also business tax.
 

ziaulislam

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There is huge resistance to pay taxes in form of hartal

Anyway its an unpopular thing..people want the govt to just print notes like it did in last 30 years and are against govt taxing anything

As per public printing notes have worked great
 

AZADPAKISTAN2009

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Pakistan's unemployment rate is only 6.9% not 50%

Pakistan's solution against Taxes is abolishment of Personal Tax altogether and closing that Ministry



Alternative means to collect Taxes


Collect from SIM Card Renewals:
Fact: Cellular subscriptions in Pakistan crossed the 183 million mark by the end of March 2021

  • Introduce a 15% Collection Fee , when anyone renews a SIM card. 15% is automatically deducted during the electronic transaction , cash transactions the Seller of SIM card has to remit the 15% collected monthly

Collect Road Usage :
4-5 Million Users use the streets daily in 1 big city of Pakistan

  • Introduce Road usage cards, monthly passes , so people can use the public Roads , (Monthly Pass costs 500-1,000 Rupee)

Collect from Fuel Purchase :
10-20 Million Car/ Motor cycle users in Pakistan

  • 10-15% Charge on fuel purchase from every time petrol is filled at petrol station

Collect from Home Property Tax:

Must be 20 Million-40 Million houses

  • Collect from Home Property Owners 1,000 -2,000 rupee per month

Collect from Electricity Purchase:
  • 10-15% Charge on Electricity Bill goes to Government of Pakistan

TV/Radio Service Tax:
  • 300 Rupee -500 Rupee per home

Tax on Restaurant Income :
  • 1% Charge on bill , goes to Government




Pension Should be Abolished if certain Tax collection targets are not met you have to file Taxes (10-15 years) certain number of years to qualify for Pension
 
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FuturePAF

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Pakistan's unemployment rate is only 6.9% not 50%

Pakistan's solution against Taxes is abolishment of Personal Tax altogether and closing that Ministry



Alternative means to collect Taxes


Collect from SIM Card Renewals:
Fact: Cellular subscriptions in Pakistan crossed the 183 million mark by the end of March 2021

  • Introduce a 15% Collection Fee , when anyone renews a SIM card. 15% is automatically deducted during the electronic transaction , cash transactions the Seller of SIM card has to remit the 15% collected monthly

Collect Road Usage :
4-5 Million Users use the streets daily in 1 big city of Pakistan

  • Introduce Road usage cards, monthly passes , so people can use the public Roads , (Monthly Pass costs 500-1,000 Rupee)

Collect from Fuel Purchase :
10-20 Million Car/ Motor cycle users in Pakistan

  • 10-15% Charge on fuel purchase from every time petrol is filled at petrol station

Collect from Home Property Tax:

Must be 20 Million-40 Million houses

  • Collect from Home Property Owners 1,000 -2,000 rupee per month

Collect from Electricity Purchase:
  • 10-15% Charge on Electricity Bill goes to Government of Pakistan

TV/Radio Service Tax:
  • 300 Rupee -500 Rupee per home

Tax on Restaurant Income :
  • 1% Charge on bill , goes to Government




Pension Should be Abolished if certain Tax collection targets are not met you have to file Taxes (10-15 years) certain number of years to qualify for Pension
Nickel and dimming the general public doesn’t fix the structural inefficiency that cripple economic growth which should be paying for the increased tax collection needs.

cutting most subsidies and allowing market forces to dictate prices incentive investors to increase investment in profitable industries.

Money that would otherwise go towards subsidies can go towards funding our Critical infrastructure that will attract investors. For example, the ML1 railway and getting international investors continuing that railway to Central Asia (bringing Uzbek cotton to Pakistani textile factories, at cheaper prices then the competitors, and creating a corridor to Central Asia that will bring investors to Karachi port)

income tax from those employed by these new big foreign investors can help fund government tax needs. Also with a profitable ecosystem created, Local producers will have to up their productivity or chance losing a share of government tax breaks and cheap electricity.

On an individual level, better to create a plan that incentivizes people, like farmers to reinvest into their farmers with modern agriculture technologies so they increase crop yields, rather then extract money that could do more good at the grass roots level, literally
 
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AZADPAKISTAN2009

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Pakistani people are special group so special type of tax collection is needed based on demographics

8-)

  • If you are poor , don't eat at restaurant weekly (no fluffy tandoori roti for you)
  • If you are poor , don't use those fancy cell phones
  • If you are poor , don't live in that 1 Crore home
  • If you are poor , don't live in that 25 lakh apartment
  • If you are poor , take the bus instead of filling up petrol in your motor bike (it's all imported)
  • If you are poor , don't use internet for video game online streaming , look for job in news paper

If you are poor don't have a massive Shadi in Shadi hall with 1000 guests and 4 dishes , have wedding with 4 guests


80% of people who don't pay taxes are drama baz free loaders they always have money to build 4 stories above single story home but when you ask them to pay taxes , their claim life is so difficult for poor class

But once you go overseas all the taxes are paid happily by Pakistanis
 
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