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Tax returns

August 14, 2019

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THE fact that more than 2.5m people have filed tax returns for the last fiscal year is indeed a good sign that the FBR wants to project. Especially considering that in the previous tax year, this figure was just under 1.5m. So there is an increase and an appreciable one. But the fact that it took eight extensions of the deadline, and that the filing season of the last fiscal year has continued into the present one, takes some of the shine off the claim. Getting people to file their returns is an important exercise, and whenever the number of individuals stepping up to fulfil this crucial responsibility goes up, it is a marker of success. But further questions must still be asked because simply filing paperwork is not an end in itself.

The most crucial question is, of course, how much incremental revenue has been earned as a result. This data is still awaited and the FBR should make it a point to release it too. If it turns out that a large number of the incremental returns are from nil filers, meaning those who declare no taxable income, but are only fulfilling a formality to get their name on the Active Taxpayer List, then it clearly indicates that the real uphill task of broadening the base and getting recalcitrant parties to declare their incomes remains to be done. And if an appreciably large number of the incremental returns is from those who are salaried people whose taxes were already being deducted and deposited, but were simply negligent in their duty to file their returns, then once again the amount collected as incremental revenue through the exercise will not show as appreciable an increase as needed. The ultimate test for the FBR in these trying times is to realise actual material revenue, without resorting to gimmicks, and by spreading the burden of the incremental revenue effort to other parties. That test remains to be passed.

Published in Dawn, August 14th, 2019