KARACHI, April 21: Member Direct Taxes and Additional Secretary Central Board of Revenue Salman Nabi said on Friday that the number of taxpayers would increase to 1.5 million by the end of current fiscal, from 1.34 million.
Speaking at a pre-budget seminar, organized by Income Tax Bar Association Karachi (ITBAK), he said that during the last three years there had been constant rise in number of taxpayers but it was still very low in view of huge population of 150 million.
Mr Nabi said that in the year 2003 only one million taxpayers were filing returns and this number rose to 1.34 million till March 31, 2006, showing a massive increase of 40 per cent in the last three years.
He said that the tax-to-GDP ratio had not shown any improvement, which is one of the lowest in the region, despite sustained increase in the number of taxpayers, who also have National Tax Numbers (NTNs).
The member direct taxes said that there were a lot of apprehensions among the revenue collectors about the success of self-assessment scheme launched three years back, but the response had been very encouraging.
However, he said that a substantial amount of revenue collection came through withholding tax, which suits our country. “Around 100 million of the total population live in rural areas and, therefore, the agriculture tax under the constitution was not a federal subject and the provinces should be allowed to impose and collect it.”
Mr Nabi further said that after excluding 48 per cent female population, children and old age people 20 million people were left as potential taxpayers in the country.
“Still a fairly large number of people are paying tax though they may not be filing tax returns and stay out of the tax system. Therefore, the challenge is to bring them under the tax net,” he added.
Supporting his argument he said that 2.1 million Wapda and 400,000 KESC consumers, importers and exporters and bank account-holders were also paying withholding tax.
He further said that around 20 million cell phone users and 5.5 land line subscribers also pay withholding tax along with their monthly bills. “However, our problem is that the number of people who file tax returns is very low.”
Tax-to-GDP ratio, he said, was very poor owing to illogical composition of taxes. “The agriculture sector, which contributes 20 per cent to the GDP of the country, is out of tax net instead provinces should be given powers under the constitution to impose it and collect it.”
Furthermore, he said the energy sector had been given life long tax holiday by previous government to encourage investment in this sector to meet power shortage. So was transport and railways which did not fall under tax net. “There are policy issues which are needed to be addressed in coming years.”
He disclosed that new tax return forms would carry some changes. He also hinted at making taxation system simple for salaried class.
He also agreed that there was a need for revising tax treaties with many countries.
The other two speakers of the seminar were Arshad Siraj Memon and Majid Khandwala who read their papers on income tax and sales tax respectively.
