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Achievable tax target

Achievable tax target

Taxes are considered the major source of income in developed economies where most of the citizens voluntarily pay taxes as a national obligation. The money collected through taxes is used to run the official machinery and development projects, but in Pakistan, tax culture has not been fully introduced and citizens are also skeptical of the tax system as a whole.

The Federal Board of Revenue (FBR) has set a target of Rs 2.81 trillion for the fiscal year 2014-15, which seems rational and achievableif the government adopts an effective strategy.The heads of large taxpayer units and regional tax offices have already been told to achieve the target which has been set after keeping in view the budgetary and taxation measures and there are little chances that it will be revised downward. The target is about 25 percent more than the last year’s target.

According to newspaper reports, FBR chief Tariq Bajwa firmly believes that the target will be achieved as Rs 522 billion have been collected under taxes and duties in the current fiscal year. Tax collections are equal to 10 percent of the gross national product(GDP) in Pakistan and this ratio is about 15 percent in India and more than that in several other countries. Tax collection in Pakistan should also be at least 15 percent of the GDP to allocate funds for development projects. Enhancement of tax net is essential to rid the country of foreign loans and there is a need to reform tax system to encourage the people pay taxes. In the current situation, the citizens are reluctant to be registered as taxpayers, fearing undue pressure and persecution from the tax collection machinery. There is also a general impression that hard earned tax money is not properly utilised and is wasted away by the people at the helm of affairs. There is a need to enforce such a tax system which should be simple, normal and business friendly while proper utilisation of the public money should also be ensured.