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Reforming tax system

Reforming tax system

After years of travelling on the hackneyed path of omissions and commissions, the policymakers have finally reached a conclusion that a paradigm shift in existing tax system is indispensable for widening the tax net and increase revenue collections. According to newspaper reports, the government has decided to implement much awaited structural reforms in the federal taxation authority to arrest the speed of growing volume of black economy. A three-tier hybrid system will be introduced to reaching out the small administrative units. A meeting of the Tax Reforms Implementation Committee, which held under the head of Finance Minister Ishaq Dar, gave a go-ahead to the new system but with directions to keep the best parts of the current and old systems intact. However, the government deserves kudos that it has realized the needs for reforms in the tax collection system and the worst part is that all the authorities are stuffed in the income tax officers from assessment to audit of the income of an individual unlike the current practice where the tax file of an individualis dealt by four officers who work in isolation.

Under the new system, the regional tax offices will be divided into corporate section for corporate clients and the territorial section to deal with individuals and association of persons. The facilitation centres for taxpayers will be upgraded to the territorial sections. However, the large corporate taxpayers will be treated under the current functional system whereas the individuals and association of persons will brought under the old circle system. The supreme taxation authority has agreed to implement the recommendations of the Tax Reforms Commission to enforce its writ at the smallest administrative units. The current tax amnesty scheme introduced by the Federal Board of Revenue has received lethargic response from potential taxpayers to the utter disappointment of the government. It is believe that the number of non-filers having national tax number is four times more than that of the filers, but the number of active taxpayers is showing downward trends instead of increasing the tax base.

As a matter of fact, the Pakistani society is complex and mixed breed of people due to various cultural and historical reasons. The official cadre is also part of this society which is marred by confusions and conflicts and any system or law which gives unlimited powers to the officials will end in fiasco. Every system is good system if check and balance is ensured at the official level. But fact remains that at the policy level the nation adopts selective approach in every matter whereas commons sense is not so common at the individual level.