LAHORE: Public friendly taxation, fair utilization of taxes, transparent and incentive based taxation, accountability of tax officials and independent judicial system are need of the hour to increase tax base by manifolds.
This was the crux of an exclusive interview of newly elected Lahore Tax Bar Association President Munsha Sukhara with Customs Today.
“Because of tax system’s basic faults people don’t like paying their tax liabilities voluntarily but the tax authorities forcefully collect the revenue. Taxes are life blood of every economy and taxpayer must be taken of good care to nurture their taxpaying habits. We don t have real tax laws in first place like withholding taxes are being deducted on daily withdrawals and transaction of the taxpayers. Basically, we need to bring about some basic reforms in the tax system like an independent tax policy board should be set up by taking all the stakeholders including Federal Board of Revenue (FBR), taxpayers and professional bodies, economist in the loop. The board should take proposals from all the stakeholders including FBR,” LTBA president underscored.
He added that taxes are not use to achieve budget targets but they are used to take economic measure in order to adjust social and economic steps.
“Luxury items should be taxed heavily and the consumer goods should be spared. In order to save local industry and increase exports manufacturers should be give incentives which will in turn add to foreign exchange and maintains balance of payment while imports should again be taxed heavily. Such tax policies and measures enable the economies to flourish,” Sukahra viewed.
“Our tax system is not transparent as non-taxpayers have many advantages over taxpayers because every year amnesty schemes are introduced that promotes tax evading culture. The taxpayers who pay 30-35 percent every year they remain at a disadvantage,” he told this scribe.
To a question he explained that ‘our tax system is not according to capacity tax system as everyone is paying taxes. People are paying on daily and transaction based taxes including consumption taxes, salary tax, rent tax, stock exchange tax, property sales purchase tax, retailers’ tax”.
Taxes in Pakistan have been imposed over-capacity from the point of view of lower income group while higher income group is paying under capacity tax, the LTBA president highlighted, adding that, “we have disproportionate tax system because we have 3 percent wealthy people who processes 97 percent of the national wealth while 97 percent people have only 3 percent wealth.
“People under lower income group are sustaining higher tax burden, while higher income group is bearing lower burden. Tax base will not be broadened just by increasing the numbers of returns by bringing the quality taxpayers in to the tax net,” Sukhra explained, disclosing that we need to double the 123 quality taxpayers who are corporate sector runners.
He said that progressive taxation is something in which higher income group is taxed higher while the lower income group should be imposed lower rate of taxes. The surplus will enable the government to undertake welfare deeds and projects including health, education, security, infrastructure and defence.
Unfortunately, in Pakistan lower and higher income groups are taxed with the same rate that is making rich man richer and the poor, poorer, pointed out. “We are also facing improper utilization of taxes as big chunk of our taxes is spent on protocols of bureaucracy and politicians and debt servicing instead of education, health, infrastructure and basic necessities of the lower income group also discourage the people to pay their tax liabilities,” the LTBA president accentuated.
In the whole world if any citizen is unemployed, he is paid unemployment allowance for a particular time period, he pointed out, adding, people feel safe and secure there while in case of Pakistan this cannot be imagined even. In order to cultivate taxpaying habits the government must ensure proper utilization of taxes.
Then taxpayers are also not provided independent judicial system to protect the taxpayer as all the heads of tax-case deciding authorities are appointed from the same department that dame care of the taxpayers’ interests, he stressed. In this regard, the government should set up special courts like consumer courts, banking courts, Independent justice system will also enable the people to pay their tax liabilities, he concluded.