FINANCE MINISTER Shaukat Tarin has once again sought to reassure the country’s business community that the tax notices sent to businesspeople will be rescinded, and new measures enforced to put an end to harassment of taxpayers by FBR field officials. He told businessmen in Karachi that the government planned to enhance its tax revenues by implementing the universal tax assessment scheme and that in future, notices would be issued only by third-party auditors after due diligence. Nevertheless, he said there would be harsh punishments, including arrests, for tax dodgers. The harassment of honest taxpayers is unjustified and intolerable. But there is frequently a very thin, blurry line that separates harassment from tax-enforcement actions. While our tax collectors often use this grey area to put excessive pressure on taxpayers, many in the business community and other powerful groups exploit it to avoid payment of their actual taxes. How can notices served by the FBR asking non-filers to pay their taxes and file their returns be categorised by anyone as an act of harassment? A couple of months ago, a senior FBR official had apprised a parliamentary panel that only 10pc of the nearly 13m people who have been served tax notices in the last three years had responded and had started to file their returns. The rest of them did not even bother to explain the reasons why they were not required to pay taxes or file income tax returns — simply because they were not expecting any action or believed that they could get away with their noncompliance by greasing the palms of corrupt taxmen.

If harassment by corrupt FBR officials is unacceptable, so is widespread tax evasion by the wealthy and powerful. It is not for the first time that a government is putting its faith in the universal self-assessment scheme for mobilising tax resources to run state affairs. However, past experience shows that the effort is unlikely to bear fruit unless the government extensively employs modern technology to lessen the discretion of tax assessors and collectors, simplify and reduce taxes, improve complaint-resolution mechanisms and punish tax dodgers as well as officials found guilty of badgering and bullying honest taxpayers. At the same time, the business community should realise that it is their unwillingness to pay taxes that creates space for corruption and what they call harassment by FBR officials.

Published in Dawn, August 23rd, 2021