THE grim realities of Pakistan’s flailing efforts to ensure tax compliance often present themselves as farce. According to a report published in these pages, some 10,000 officers of the Federal Board of Revenue have not bothered to file their income tax returns for the last two years. The trend is especially pervasive in officials below Grade-17, with the rate of non-compliance reported to be somewhere between 60-70pc across the country. A significant percentage of senior officers, too, seemingly have no qualms about failing to meet the legal requirement of filing taxes, which puts a big question mark on the FBR’s moral authority. It is particularly galling that compliance levels are low even though FBR employees have been granted a much longer deadline to file their taxes compared to ordinary citizens — a ‘special privilege’ extended to them by the country’s tax chief.
While, on the one hand, the FBR has been threatening ordinary citizens with the suspension of utility connections and phone services in case they fail to comply with tax notices, its own officers seem not to be bothered at all by the consequences of failing to do so. This is a deeply embarrassing reality check for the FBR, and it must be asked why an otherwise serious obligation has been allowed to be turned into something of a running gag. It is almost a given that the deadline to file returns will be extended every year, which gives citizens reason to be complacent about fulfilling this national duty in a timely manner. Clearly, the disincentives for non-compliance are too low, and potential filers, therefore, do not take the matter seriously enough. It should also be acknowledged that filing returns could still seem like a rather intimidating task to the majority of ordinary citizens, given the dismal state of financial literacy in the country. A concerted effort, therefore, needs to be made at the national level to familiarise people with the process of filing tax returns, remove their misconceptions, and continuously simplify the process so that more and more citizens can file their returns independently. It seems clear that Pakistan still has a very long way to go in order to reach a respectable degree of compliance. Perhaps it is time for the authorities to start questioning their methodologies and stop repeating the same cycle again and again.
Published in Dawn, December 8th, 2023