KARACHI: The government wants to generate more revenue, but it avoids widening tax base that is said to barely cover 0.30 per cent of the population, said former president of the Karachi Tax Bar Association (KTBA) Anwar Kashif Mumtaz on Monday.

In a seminar organised by bar association on the Finance Act, 2014, attended by tax practitioners and consultants, he said the government opted to introduce multiple categories with varied rates in the Act instead of broadening tax base.

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Mumtaz, who was the keynote speaker at the event, pointed out that in order to improve government’s cash flow, distinctions between tax filer and non-filers have been established in the Act. A non-filer will have to pay an extra or enhanced tax rate by up to 5pc.

However, he was critical that the burden to identify filer and non-filers rests upon withholding agents or bank. It is also mandatory that even if a person has paid tax or has National Tax Number, their names should appear on taxpayers’ list, he said.

Citing another example where government’s motive is only to increase tax collection, Mumtaz said that tax on bonus shares paid in kind will now be subjected to income tax. He said this is totally against the spirit of Section 158 of the Income Tax Ordinance because there is no element of payment.

He said the excess of alternate corporate tax paid over the corporate tax shall be carried forward and adjusted against the tax payable for the following years.

If excess tax is not fully absorbed in the following years, it can be carried forward to ten years immediately from the excess first computed.

Published in Dawn, August 26th, 2014