In a bid to check the practice of tax evasion, the Federal Board of Revenue (FBR) has decided to block the mobile phone SIMs (subscriber identity modules) of the under-filers, sources say.
According to the sources, the FBR has finalised preparations for the purpose in consultation and assistance of Pakistan Telecommunication Authority (PTA) after identifying 400,000 such individuals, as they did not file their returns despite having taxable income.
The move comes after these persons failed to comply with the directions even after receiving the FBR notices on the subject.
On the other hand, there are another 100,000 individuals who have been listed non-filers as there SIMs would also be blocked.
However, the sources say, the list of 500,000 individuals on whom the authorities are zooming in just represents the first phase and has been given a final shape after detailed discussions involving the FBR, the PTA and the mobile phone operators.
It is reported that the FBR had actually identified two million possible tax evaders, but the mobile phone companies requested that they could not block such a huge number of SIMs in a one go.
The current economic crisis is a result of dismal tax-to-GDP ratio in Pakistan – one of the lowest in Pakistan – which is a product of the government failure to expand the tax base, resulting in an alarming increase in indirect taxation and further burdening those who already pay the amount.
In this connection, Prime Minister Shehbaz Sharif recently vowed to increase the tax-to-GDP ratio to 15 per cent in the coming years, while the government is also making progress on imposing tax on retailers in the country.
With the International Monetary Fund (IMF) pressing Islamabad hard to bring the retail, agriculture and real estate sectors into tax net and reduce the budget deficit, moves like blocking the SIMs are unavoidable.
Islamabad is already desperately looking for another long-term and larger bailout package from the Washington-based lender and will like show some progress on the subject, with Finance Minister Muhammad Aurangzeb leaving for Washington to hold talks in this regard.
The government has already sought bids from the interested parties for the PIA – the biggest lossmaking state-owned enterprise (SOE) – thus meeting another main IMF condition.