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Problematic taxation system

September 01, 2013

THE Federal Board of Revenue continues to apply regressive policies. It is adamant to fill its inadequacies through arbitrariness and highhandedness.

The newly-enacted Finance Act carries some controversial provisions that would hit hard the already-overburdened taxpayers. The act empowers the commissioner to call for the audit of any income taxpayer.

The commissioner can now initiate audit and call for any record or document purported to be in possession of the taxpayer. This proviso is in extension of the already well-prescribed mode of audit. The addition of an absolute discretionary power may be misused or misplaced and shake the confidence of existing taxpayers.

The FBR has failed to include new or evading taxpayers into the tax net and it continues to impose its policies over the regular taxpayers. This is fully evident from the introduction of new proviso 165-A which envisages making arrangements with the banking sector to make available the complete online record of any customer to the FBR.

Moreover, this Finance Act also brings penalty proviso whereby non-filers of return forms on time could be penalised Rs20,000 at the minimum. It may cause injustice to those taxpayers who are either ignorant or illiterate.

The other uncalled for proviso relates to the introduction of the Income Support Levy. It is only collectable from existing taxpayers and thus becomes discriminatory in nature.

More importantly, the state is already collecting all direct and indirect taxes from the taxpayers and the addition of this levy becomes problematic, so it needs to inform all taxpayers why the levy is being imposed. On the surface, this levy amounts to double taxation because the state is already collecting taxes on income.

There is apparent lack of will to tax the rich and exempted class while the already-burdened ones are being penalised at their cost. This year like before, the poor class became the target of increasing indirect taxes. There is dire need to change the mindset and shift the burden of taxes on those who are actually supposed to contribute a chunk of their share in taxes but they are either exempted or allowed to go scot-free.

Furthermore, FBR authorities are also urged to extend the date of filing tax return forms from the given date of Sept 30 to Dec 31. This will facilitate more and more taxpayers to file their returns. Besides, income tax officials could also make efforts in the meantime to locate evading taxpayers and bring them to the tax net.

Secondly, this year the tax returns have been issued very late which is creating problems for willing taxpayers.

Thirdly, the taxpayers are also instructed to file their wealth tax forms along with their returns; this also requires more time for determination and submission.

Advocate & General Secretary
Tax Bar Association, Larkana