The Federal Board of Revenue has been consistently attempting to meet new targets and increase tax revenue for the government, but the many challenges faced are still letting potential tax evaders off the hook. This is down to the sheer scale of the backlog faced by the current administration. We have been collectively ducking and dodging the system for years to the point where even conducting audits on financial irregularities has become next to impossible.
This is why the authority has had to close out over 300,000 cases in the last 3-6 years without auditing them, as it was supposed to. But even if we chalk up some of the missed opportunities as an insurmountable task, FBR must also take responsibility for its failure to pursue these cases in a timely fashion. Bear in mind, that this development comes only days after NAB handed over the bulk of business community cases to the tax collector; are any of those cases also meeting the same fate? If not, will they eventually, after six years have lapsed?
These audits can help detect attempts at tax avoidance, and potential strategies to launder wealth. If it were not for the FBR’s own audits, businesses and the general public could declare whatever they want, and not get penalised for misdeclaration of assets and income. Letting 300,000 cases pass through without scrutiny could mean millions potentially lost in tax revenue; we will never truly know what the true loss is.
In the past few years, we have definitely seen the tax net widen and revenues increase. As that happened, the quarterly targets have always gone up—although they are not often met. Things have improved, but in the grand scheme of things, our collection rates still have a long way to go before we are accurately taxing the bulk of the population. Only through increasing direct tax collection can we slowly head towards a progressive mechanism; after which the poor will finally be paying less tax in proportion to their income compared to the rich. Until then, FBR must look to carry out its responsibilities efficiently.