MORE than two years into the government’s attempts to ‘broaden the tax base’, the number of people filing their returns has been consistently falling.

As of the latest data, the total number of returns filed this year has barely reached 690,000. Last year, the figure was 750,000. The drop is appreciable — 8pc — and comes after the tax authorities claim to have sent out 233,000 notices to potential taxpayers, out of which only 33,000 returns of new filers have been received.

The slow grinding pace of the process speaks to the inherent difficulties of inculcating a tax culture in a country habituated to ignoring the tax authorities. But it also speaks volumes for the inefficiencies that the entire taxation system is riddled with.

The inefficiencies are present in both areas crucial to successfully broadening the base: administration and enforcement.

The system of mandatory electronic filing of returns for salaried persons, association of persons, and companies may be good for bringing about some automation in the filing process. But the system is so cumbersome to use that the finance minister’s own tax returns had to be handled by two senior members of the FBR to complete the process.

On the enforcement side too, very little effort is being put into pursuing those who have filed returns in the past and then fallen off the radar. Tracking taxpayers from year to year and conducting regular analyses on the data generated by the taxpayers database should be a regular feature of the FBR’s workflow.

Instead, the officials are seen largely working in silos, focused only on executing their own tasks. The government claims that the figure for this year is smaller because a large number of potential filers are waiting on the sidelines for the tax amnesty scheme to go into force, following which they expect a big jump. It would be easier to believe this story if they could establish that it is indeed traders alone that account for the bulk of the drop in filers this year.

Their inability to present such data only means that an analysis of the situation is being developed without any empirical foundations. The citizenry needs to undergo a change in mindset if the goal of broadening the tax base is to be achieved.

But the FBR also needs to undergo deep reforms and an accompanying change in its own thinking to lead the way. Thus far, that does not appear to be happening.

Published in Dawn, January 8th, 2016