ISLAMABAD: The Transparency International Pakistan (TIP) has claimed that the government has failed to implement its recommendation made on the order of the Supreme Court of Pakistan in Oct 2013 which would have increased revenue collection from Rs 1,942 billion to Rs 4,000 billion.
In a letter sent to Federal Finance Minister Ishaq Dar, TI-Pakistan Adviser Sohail Muzaffar has invited his attention to the report prepared at the behest of FBR by International Centre for Public Policy, University of Georgia estimating over Rs1,800 billion tax evasion annually. “The FBR report of Rs1,800 billion short collection of taxes, confirms the TI Pakistan report which had indicated Rs2,000 billion shortfall in collection by FBR, submitted in the Supreme Court of Pakistan on Oct 3, 2013,” he said.
He informed the minister that in the civil misc application 2013 filed in the Supreme Court in the suo motu case regarding law and order situation in Karachi, on Oct 29, the TIP was asked by the Chief Justice of Pakistan to provide a rough figure of annual leakage in collection of revenue. The Supreme Court was informed that public is paying taxes, but the businessmen are not fully depositing revenue in treasury. Further TI-Pakistan was informed that due to the malice of flying invoices, the GST adjustments are mostly on fake documents. On a question asked by the Chief Justice of Pakistan, as to what measure could be taken to plug this huge tax loss, TIP had stated that “if the political will of the government and the FBR chairman is there, the scheme for achieving the goal of zero tolerance against corruption could be prepared by TIP, and that this scheme will ensure the Tax-GDP-ratio to increase from 8 percent to 16 percent in one year.
The Chief Justice had directed the TIP to prepare proposals and submit it in the apex court on Oct 30, 2013. Sohail Muzaffar said the proposal was submitted on Oct 30, 2013, which needs to be implemented in toto, and “is sure to generate approximately additional Rs2,000 billion tax. Loss of one day may result loss of Rs6 billion revenue.
The minister has been requested to examine the TIP proposal for the budget of 2014/15, and if possible act on the recommendations which are very simple and easy to apply. In accordance with the orders given by the Chief Justice on Oct 29, 2013, Syed Adil Gilani the then adviser, the TIP had submitted following recommendations to curb tax evasion in FBR, and make it a department of “Zero Tolerance against Corruption,” and plug the estimated tax leakage of Rs2,000 billion per annum. The recommendations had covered customs, administrative and technological measures, risk management of containers, transportation of containers, en route monitoring, and receipt of containers at border customs-stations. Legal mid-term and long-term measures, recommendations were also made to broaden income tax net. Similarly, major corruption was identified in refund of sales tax and its adjustment. The TIP recommended that as a policy, the FBR should abolish adjustments and refund. It pointed that If the FBR makes irrevocable policy of “No Refunds No Adjustments” total GST leakages by frauds/evasions will be stopped.
