KARACHI, June 9: There is an urgent need to triple the present number of taxpayers from 1.5 million to 4.5 million. This will help enable the government to reduce tax rate and increase revenue collection.

"Above all, it would be judicious if all categories of incomes irrespective of their source are taxed, and no segment of society is left out of the tax net. These measures will help broaden the tax base and reduce the burden on people already in the tax net."

Income Tax Bar Association Karachi (ITBAK) President Younus Rizwani Sheikh raised these points in budget proposals while talking to Dawn here on Wednesday. The ITBAK, the largest tax bar of the country, is of the view that without broadening the tax base, the government will not be able to improve the tax-to-GDP ratio and also reduce the high tax rates.

Mr Sheikh said the ITBAK had been demanding of the government to provide some sort of incentives to the taxpayers viz-a-viz non-taxpayers. Citing an example, he said capital value tax (CVT) was one such tax payable on acquisition of certain assets by non-taxpayers.

Whereas the taxpayers were exempted from CVT, but this tax was abolished a few years back, and now it is being proposed that CVT may be reintroduced. The bar association has also suggested that on purchase and booking of vehicles, production of NTN should be made compulsory and the details of buyers be submitted by the automobile assemblers to the tax department within 15 days.

"We need to develop a 'tax culture' in the country and publication of taxpayers' directory can be one of the tools in this direction to help promote this objective. Such directory was compiled and published only once, but thereafter it was discontinued."

Similarly, when there is a strong need for promoting tax culture it is also the responsibility of the state to collect only due tax and refund excess collection immediately, the ITBAK pointed out.

Above all, the refund procedures are cumbersome and become a major cause of corruption in the revenue collection system. Though the CBR periodically announces refund figures paid to the taxpayers, irritants in the way of collection can be curtailed if unnecessary or excess taxes are not collected in the first place, he added.

The ITBAK president lauded the services of the Federal Tax Ombudsman. He says it is the only forum where the taxpayers get great relief. "The FTO has been doing a wonderful job in mitigating taxpayers grievances.

The cost element as well as time in announcing the judgment has enabled the FTO to win the confidence of taxpayers." Mr Sheikh said that the bar association had also suggested to the government to allow 'advance ruling' facility with regard to tax liability to local investors as well. At present this facility is only given to foreign investors.

He said that advance ruling facilities helped the prospective investors know in advance about their tax liability. Once an investor comes to know about this tax liability, he can plan his business and investment strategies accordingly.

Advance ruling, he said, also shared the burden of judiciary and restricted the revenue officials from using discretionary powers. There are a number of countries where this practice is being followed successfully, he added.