ISLAMABAD: The federal government has decided to bring long-term reforms within the current taxation system of Pakistan.
Sources privy to the development said that the government aims to bring long-term reforms within the current taxation system keeping in view the revenue-contributing factors as the tax department has failed to increase revenue due to the distortionary tax system and inefficiencies.
They added that the tax department has to prioritise the annual targets while focusing on medium to long-term measures and structural reforms to address existing issues in processes and mechanism.
In the first phase, the federal cabinet has given the approval to separate policy and administration matters.
Sources said that the government would introduce the Tax Policy Board that will consist of federal ministers related to commerce, finance, economic affairs along with parliamentarians and tax experts.
On the other hand, the government in coming days is also likely to establish Tax Policy Unit in Ministry of Finance (MoF) consisting of a small group of economists and tax experts, who will act in advisory capacity to the government.
The Imran Khan led government is also considering introducing technology-based solutions for the identification of tax evasions and enhance transparency.
Sources further said that the tax department will also hold workshops for the capacity building of provincial tax officers. The basic purpose of this is to increase agricultural income tax.
In the administrative measure, the government is likely to introduce protection laws for whistleblowing, recognition of top taxpayers and tax directory for all taxpayers for positive social and cultural impacts.
Sources further informed Pakistan Today that tax department in collaboration with the State Bank of Pakistan (SBP) and the Tax Reform Commission has also planned additional reform measures like improved functional and territorial jurisdictions through structural reforms, independent boards and bringing efficient alternative dispute resolution mechanism, better coordination with SBP to enhance monitoring of outward remittances and introducing service quality standards and provision of ease for tax payments.
In order increase the capability to detect under-invoicing, sources said that the tax department is also considering reviewing of software, furthermore, designing risk management algorithm, remote clearance, and better integration between Customs and Sales Tax data.
Besides this, Federal Board of Revenue (FBR) in collaboration with Ministry of IT, Higher Education Commission (HEC), and National Database and Registration Authority (NADRA) will introduce measures to mark tax evaders by using income and expenditure data, adoption of sophisticated data analysis and predictive techniques, and collaboration with utility providers (DISCO, SNGPL, SSGC, PTA) for data cleansing and integration to identify current user.
While appreciating govt efforts to innovate CBR system through various schemes for enhancing govt revenue, the fact remain that unless public is convinced that their hard earned money goes to the welfare of deserving ones, they will not pay taxes to their full extent. Pakistani businessmen are more God fearing and if they can give in zakat/charities, they will also be pleased to pay their due taxes rightfully. In a welfare state like UK, govt functionaries including PM live like poor and their masses live like rich and that is why people pay their taxes willfully.
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