Lahore - Advisor of Prime Minister for Revenue Haroon Akhter has said that as Pakistan was passing through a very crucial juncture, efforts were being made to improve Tax-to-GDP ratio which has risen from 9 percent to 11 percent and it will improve further to 12 percent this year but it was still very low as compared to India where Tax-to-GDP ratio stood at 18 percent.

Exchanging views during his visit to the Karachi Chamber of Commerce & Industry, he added, “If Tax-to-GDP improves by 6 percent, bringing it at par with India, we will have a surplus budget and hence, the revenue earned will be utilized to build projects and ensure prosperity for the country.” He was of the view that some out of the box solutions were needed to improve the dismal Tax-to-GDP ratio.

Chairman Businessmen Group and Former President KCCI Siraj Kassam Teli, Vice Chairmen BMG Haroon Farooki and Anjum Nisar, President KCCI Younus Muhammad Bashir, Senior Vice President KCCI Zia Ahmed Khan, Vice President KCCI Muhammad Naeem Sharif, Former Presidents KCCI AQ Khalil, Haroon Agar, Abdullah Zaki, Iftikhar Vohra along with KCCI Managing Committee members and FBR officials were present at the meeting.

Referring to the amnesty scheme for non-filers, the Advisor said that all recommendations given by non-filers from time to time were agreed upon and implemented yet they were not satisfied with the scheme as they don’t want to pay taxes or become filers. “They simply don’t want to come into the tax net and were looking for immunity forever which is not possible.”

He said, “We have to encourage people to make legitimate money and give medals to loyal taxpayers who have been making invaluable contribution to the national economy.”

Referring to the concerns expressed by KCCI over inaction against tax evaders, he said that notices were being served to those tax evaders who have been living luxurious lives, frequently travelling abroad, using credit cards and their kids have also been studying abroad. Moreover, notices were also being issued to those individuals whose returns filed at the FBR were not depicting their lifestyle while a Benami Transaction Act will also be introduced very soon, he added.

Referring to suggestions presented by Tax Reforms Commission, he admitted that 80 to 90 percent of TRC report carried those suggestions which were needed to bring positive changes and improve functioning of the FBR. “Some of TRC recommendations will be added in this year’s budget while others will be introduced later as we cannot expect positive changes overnight but we are on the right track.”

He was of the view that situation has improved as compared to what it was two-and-a-half years ago which can be gauged from improved law and order situation in Karachi, rising foreign reserves, contained inflation, and minimum load shedding. “Everything is geared towards one objective i.e. to ensure macroeconomic stability but it was not enough and we have to achieve real growth rate of 7 percent.”

Speaking on the occasion, Chairman Businessmen Group & Former President KCCI Siraj Kassam Teli said that although it has been stated on various occasions that the country lacks tax culture but unfortunately whenever tax culture was being discussed, it remains limited to taxpayers’ culture only whereas nobody bothers to speak anything about FBR culture.

“Faces change but the criteria and attitude to implement the system remains the same for the past many decades”, he said, advising the Advisor to work honestly and truthfully for improving the overall tax culture which should not be limited to just taxpayers but also be extended to improve the functioning and attitude of tax collection authority. He pointed out that FBR has been using arm-twisting tactics and harassment to existing taxpayers and after seeing the miseries being faced by loyal taxpayers, people simply prefer to stay away from the tax net. “The intent of tax collectors needs to be transformed as it is because of their bad intent and the massive discretionary powers, which encourage them to create more problems only for the loyal taxpayers”, he added.

He was of the view that most of the discretionary powers which have been included in the Sales Tax Laws have been copy-pasted from the controversial Excise Laws. Due to Karachi Chamber’s efforts to get these draconian laws removed during the era of Prime Minister Shaukat Aziz, the excise laws were gradually eliminated and these were applicable on six items only but once again, these laws have been legislated through the Finance Bill in the past three budgets presented by Ishaq Dar, enabling the FBR officials to continue with their arm-twisting tactics and harassment.

He recalled that Sales Tax Laws initially introduced in 1994 was a flawless computerized system from UK which worked smoothly and people were honestly paying sales tax but unfortunately, it was disturbed in 1997 by gradually changing the forms and making corrections, which totally sabotaged the entire Sales Tax collection system and it was deliberately done to pave way for corruption.

“If this system would have continued, the entire Pakistan would have been paying sales tax”, he said, urging the government to restore this flawless system in its original state which would help in permanently resolving issues but the corrupt element will never allow this to happen.

Siraj Teli was of the view that there were two types of corrupt elements in the FBR including those who carryout corrupt practices for financial benefits and also the sadists who take pleasure out of creating problems for people.

He said that if the government formally announces to lock down the FBR and asks people to pay little more taxes, people will voluntarily come forward to pay maximum taxes as they will not have to face any harassment or pay anything extra to corrupt officers which would surely result in substantially improving the revenue.

“Corrective measures need to be implemented from bottom to top and action must be taken against corrupt officers whereas the honest officials must be identified and a committee of such officers should be formed to improve FBR’s functioning. FBR is not fully marred with corruption as many honest officers are also part of the FBR but they are overwhelmed by the powerful and corrupt officials”, he added.

He further advised the government to introduce an amnesty scheme for taxpayers which must give an assurance that FBR will not interact with any person who has been regularly paying taxes and then the FBR should be asked to look for other sources of enhancing revenue, which will leave no other option for them but to take action against tax evaders.

Siraj Teli mentioned that FBR possesses complete data of those millions of tax evaders who have been living luxurious lives, own properties, maintain bank accounts, frequently use credit cards and also travel abroad whereas their kids have been studying in foreign universities, but these individuals have not been paying taxes. He requested the Advisor to acquire this list of tax evaders and have courage to publish the same in newspapers in order to expose these elements who were probably too influential and either have political connections or friends in bureaucracy.

He further requested the Advisor to direct the FBR to compile city-wise data of the revenue contribution so that the reality and truth about what was being contributed by Karachi city and other cities and provinces could be make known to everyone.

Vice Chairman Businessmen Group & Former President KCCI Haroon Farooki, in his remarks, stated that after an exhaustive exercise of one-and-a-half years, the Tax Reforms Commission gave its valuable suggestions to the government almost a year ago but unfortunately not a single clause of TRC recommendations was incorporated in last year’s budget and the entire exercise seemed futile.

Advising the government to identify the irritants responsible for failures of numerous taxation policies from time to time, he stressed that the mindset at the enforcement section of the FBR needs to be changed whereas the discretionary powers being used for harassing the taxpayers must be withdrawn, particularly the powers under Section 127 which enables officers to demand irrelevant documents.

Vice Chairman Businessmen Group & Former President KCCI Anjum Nisar, on the occasion, also stressed that recommendations given by Tax Reforms Commission should be given due consideration as they have been devised in such a manner by all stakeholders that these suggestions not only focus on resolving taxpayers’ issues but also ensure enhanced revenue for the country.

He also stressed the need to create a more investment-friendly climate, particularly for the retail sector which is capable of creating massive number of jobs and improving revenue.

Earlier President KCCI Younus Muhammad Bashir, in his welcome remarks, expressed deep concern over limited number of around 700,000 to 800,000 taxpayers who were being squeezed to achieve the revenue targets. “Upon introduction of amnesty scheme for non-filers, it was claimed that millions of people will be brought into the tax net, but this scheme has remained very unsuccessful which can be gauged from the fact that only a few hundreds of people have been brought into net”, he added.

President KCCI feared that if anti-business policies of the FBR along with rising cost of doing business were not controlled, Pakistan’s exports, which have already been descending, may go down further by 10 to 15 percent this year.

Criticizing the FBR for devising taxation policies for the business and industrial community of Karachi only, he stressed the need to take the business community on board prior to finalizing any policy affecting the business climate of Karachi which contribute a mammoth amount of more than 65 revenue to the national exchequer.