ISLAMABAD: Pakistan’s tax machinery has failed to enforce laws, which is leading to low tax collection. If there is proper enforcement of tax laws, country’s revenues may be doubled, said Tax Reforms Commission Chief Masood Naqvi at a National Tax Summit on Tuesday.
Since independence, he said, several commissions on tax reforms were constituted, which came up with proposals, but the same were not implemented.
The summit was jointly organised by the Sustainable Development Policy Institute (SDPI) and Oxfam.
“It is a pity that the Property Development Authority of Dubai provided a list of Pakistani investors, but the government did not raise any tax demand on them,” he said, adding “in India, stringent laws have been passed in this regard, and action is being taken.”
He explained that due to complications in establishing multiple sales tax rates, the government is looking forward to give a single rate this year on which consultations with stakeholders are going on.
He said that tax on property is the most neglected area which should be handled properly.
To improve tax management system, Pakistan should take bold measures and abolish collection of advance taxes as well as withholding of tax refunds at least for one year.
This may result in fiscal deficit, but would give a realistic assessment of our revenue collection capacity, he pointed out.
He suggested that the government take donors on board and adopt major structural and policy reforms for improving tax collection, which has regressed over the last few years.
Former Finance Minister Dr Hafeez Pasha admitted that the previous governments failed to effectively implement tax reforms in the country.
He said that because of unjust tax system, people were not ready to pay taxes. “Instead of imposing more taxes, the government should enhance the tax base.”
Former Economic Adviser Dr Ashfaque Hassan Khan said the tax machinery had failed to generate and mobilise resources. He suggested that the Centre should vigorously pursue the issue of imposition of tax on agricultural income by the provinces.
There must be separate organisations for tax policy and tax collection, and tax collection should be the sole responsibility of the FBR, he said.
“FBR starts with unethical practices when slippages occur into the system by holding back refunds,” he said, adding that the FBR paid Rs12 million to commercial banks as interest for the amount it acquired from banks for jacking up the number.