LAHORE: In order to improve its revenue collection the government must change its policies. The Federal Board of Revenue (FBR) should be headed by a tax professional who understands the nitty-gritty of tax collection as the appointment of non-tax professionals has neither brought the desired change nor enabled FBR’s full potential to be realized.
Mahboob Saqib, former customs director valuation shared these views with Customs Today exclusively here the other day.
“The past experiences should be taken as a learning experience and the future be ensured by a pragmatic, realistic approach with trusting the trade and industry and involving them in designing of systems and programs which are both beneficial and acceptable, providing ease of clearance and as well as protecting government revenue.
He suggested that the national tax numbers (NTNs) should be discontinued and the computerized national identity card number (CNICNs) should be the tax number for everybody, while the income tax rate be rationalized so the rich taxed according to their capacity.
“On the custom side, the problem areas are principal appraisers, appraisers, inspectors and clearing agents. The much talked about WeBoc system has no database in the system which could check the declared values with the valuation data base,” he pointed out.
“The checking is done by the principal appraiser, which is against the whole concept of automation ie reducing the contact between importers and custom officer and reduce the clearance time, not to mention corruption. The data evaluation should be made part of the system for automated clearance” he proposed.
The customs department has a tariff ranging from 0 to 100 percent system for automated clearance having at least seventeen different rates of duties. This should be reduced to 8 or 9 slabs. Similarly there are multiple rates of sale tax, ranging 15 to 20 percent. This should be reduced to single rate of 10 percent,” Saqib put forward.
“Payment of sales tax refunds has been an area of concern for trade and FBR both. Why does the FBR not adopt a change in strategy, in which a system of value addition is followed, where value addition parameters are determined with the input of the trade and industry, only additional tax is paid at different stages of production and no refund is involved. Here question arises what about exports, there should be exempted and imported inputs used in exports only be allowed under DTRE,” he explained.
While sharing his view on valuation side, he stated that there is mis-declaration of value in all sphere of the society. The government should take the chambers and trade bodies into confidence and reach an understanding with them to declare values correctly and if they do so would reduce taxation proportionately. This would have a benefit for the tax payer and the government with far reaching beneficial effect, viewed.
“In my experience as a customs officer about 60 percent of the goods declaration filed are cleared on the declared value. Why cannot the department clear these GDs direct delivery from the ship, thus saving time and money of the trade, minimize port congestions and these GDs can be dealt with by the post clearance department, this will also allow the department to use its scarce resources grey areas e.g. miscellaneous containers and other scandalous items,” Saqib he suggested further.
There should be will and courage to implement this without which I see no improvement in the tax collection of this country, said adding that another area which requires attention is warehousing. There is much room growth of public and private bonds, which have become unmanageable.
“I did a study on warehousing to my surprise 75 percent goods warehouses in a year were attracting duty rate of 10 percent or less. This was very surprising and should not be allowed and a sample of audit be conducted of such warehoused goods be done with physical checking, it does not make sense to warehouse such goods keeping in view the cost involved in offloading and loading twice these good not to mention the rent and other charge,” he recommended.
In my opinion public warehouses should be discontinued and only industrial private bonds license be issued attracting duties of 20% or more on their raw materials, concluded, adding that in my opinion the Custom Act 1969 has to be re-done and I am prepared to do it.
