‘Political will required to curtail revenue leakage’

LAHORE: The rulers need to show their political will in order to curtail revenue shortfall that has impacted the development strategies of the successive governments, Pakistan Industrial Traders Front (PITF) said on Thursday.
Irfan Iqbal Shiekh Chairman PITF said businessmen are worried because the country is facing a revenue shortfall that has gone from bad to worse because no government in the past four decades has tried to address it and always operated on adhocism.
He said the tax collection is low because instead of enlarging the tax base, either the tax rate is enhanced or the indirect taxes are imposed with impunity. “The tax collecting machinery is generally busy in finding out ways to enrich their purse through draconian laws,” Sheikh added.
He claimed around 80 percent of the total taxes are collected by businessmen indirectly or on behalf of Federal Board of Revenue (FBR).
Sheikh, while elaborating his point, said 85 percent of the income tax is collected through businessmen that act as withholding agents.
Similarly, most of the sales tax of entire value chain is deposited by the businessmen in the national kitty without any effort by the tax collectors.
Customs is the only avenue where duties are assessed and collected by the FBR officials. However, the menace of under invoicing and misdeclaration in customs is so high that it eats up around Rs500 billion in revenues.
The government has devised another indirect way of harassing businesses by levying 0.3 percent withholding tax on all bank transactions above Rs 50,000.
All traders want full documentation as they are paying indirect taxes in higher amount then their actual tax liability. Around 100 million mobile phone subscribers pay both income tax and sales tax on their bills. The 13 million power consumers pay GST and those with higher bills pay withholding tax as well. Same is the case with gas bills.
Shiekh said the income tax filers are entitled to get refunds of all the withholding taxes they pay after they have filed their tax returns.
However, no refunds have ever been made. He said small traders are afraid of the arm twisting tactics of FBR and the track record of the governments that continue to squeeze those that are in the tax net. “A taxpayer faces numerous harassments from the tax collector,” he added.
“The government has not been able to dent the cash culture in Faisalabad where all businesses are conducted on cash or on a chit that circulates among the traders,” he said, “It seems that FBR now desires that trades throughout the country are conducted on the pattern in practice in Faisalabad.”