The income tax bar associations (ITBAs) all over Pakistan can play a crucial role in improving the country’s economy by helping the CBR formulate business-friendly and citizen-friendly tax policies that would spur the economic growth.
Income tax practitioners (ITPs) are the intermediaries who are involved with income tax officers (ITOs) in solving the tax problems of their clients. Both the ITPs and ITOs interact and exchange information to resolve problems pertaining to their areas of interest. These two front liners who encounter each other almost every day and in the process acquire maximum information from each other which can be used in formulating good income tax policies and improving the economy.
The country can sustain its economic burden when people will pay taxes and receive their returns. Those who earn beyond a certain limit are required to pay the income tax and the government uses that money for the public good. As such, the main objective behind paying and receiving income taxes is the public good.
Income tax practitioners can be a good source of information for the ITBAs. The larger the membership of the associations, better the information of all kinds—for both the sides. It would be altogether a different issue whether the association has the ability to organize such a large group for a meaningful purpose or not but the fact is that a big size sample of information would be more reliable and useful, and could become the basis of a feedback for the CBR in its future planning.
The CBR can frame better tax policies only when it has at its disposal better quality information about tax payers and their problems. Although the CBR directly receives a feed-back on tax payers’ problems from its own staff, the ITBAs can also be helpful in exploring, matching and authenticating its own feed- back.In return, the CBR may pay ITBAs in cash or kind for its cooperation. The money thus received may be spent on training and for holding seminars for professional development.
Occasions which promote interactions between ITBAs and exchange of ideas amongst its members may be: seminars, social gatherings, meetings, development courses or other get-to gathers. ITOs may also be invited. The interaction between a large body of income tax ITBAs members and ITOs will keep the ITPs professionally updated. The objective behind these activities must be the client satisfaction and the public good and not the promotion of some private or personal interests.
In Pakistan, income tax bar associations are controlled by a small group while their members hardly have any influence. As a result, benefits of interaction among a large group is lost. When the interaction between all income tax practising members is narrowed by the clique, the power of accumulated information is lost. Larger the information, better the suggestions for the CBR and for the solutions of the problems of clients.
The ITBAs can establish their training institutes for new and old tax practitioners and establish clubs and recreational centres for their members and a library for research on their clients. They can set a standard behaviour for its members and encourage their contacts in the related fields.
The ITBAs can also contribute to the economic growth by emphasizing upon the CBR that tax rates influence the incentives of households to save, and of firms to make capital and they can advise the CBR to keep tax rates constant rather alternating between high and low. Knowing the revenue problems of income tax payers better than others,they can make a substantial contribution in improving the economy.
ITBAs can tell the CBR how revenues can be increased in the subsequent years if new tax payers are exempted from total audit for three years. Both the clients and the CBR gain but this requires convincing evidence of research which can only come through better interaction between the members of ITBAs.
ITBAs are intermediaries who can help both the tax payers and government but this requires leadership and ability and spirit to sacrifice for the ultimate good of the people. ITBAs can suggest to CBR that tax payers must receive value for the taxes they are paying. For example if the tax payers roads remain without maintenance, sewerage system risky for health, no schools for children and no clean water then perhaps the tax cannot be justified. The tax payers should bear the tax with their ability to pay and bear the burden to a great extent in proportion to the benefits they receive from government expenditure.
Poor guidance and misleading information can lead to bad policies creating confusion in the economy and distress for ITOs who are always at war in collecting and meeting the revenue targets. All income tax policies should be aimed at making the life easy and more convenient.
The CBR issues licenses for income tax practitioners and provides them a platform for earning their livelihood; therefore, they owe a duty to the nation. The ITBAs must realize that they also owe a duty to the nation in improving its economy. ITBAs can also make substantial contribution in reducing paper work of ITOs.
The government should pass a paper reduction Act. We must not encourage too much of photocopying and filing and rely on other means. This will save a lot of money which we spend on importing machines and papers. Paper work and documentation should be reduced to one half and the cost saved should be spent on digital machines. This will create efficiency in work and improve the economy.
ITBAs can help CBR in saving funds on unnecessary use of forms and papers by suggesting alternatives for four copies of challans, its filling, signing, stamping, carbonizing, posting, etc and which becomes cause of overtime payments for bank cashiers.
All these activities can easily be computerized and by saving cost for paper printing, stamping, filling, and filing which costs in millions. The old fashioned challan in quadruplicate should be the first to go by the end of 2002.
On the last date of income tax people stand in a queue in front of banks and income tax buildings, bank staff works extra hours and commissioners have to inspect all these documents hurriedly. Cost on shamianas, posters, etc, are another factor altogether.
When we can pay foreign examination fees from Pakistan to any foreign country through credit card why cannot we pay the income tax by credit card on the last day of income tax return?.
The CBR should introduce income tax return soft wares and CDs so that income tax payers are able to submit returns digitally and on-line. This will remove many individual income tax intermediaries. E-commerce and new information technology is creating disintermediation. Many income tax consultants will go. But the role of an intermediary cannot be ruled out. ITBAs should develop income tax consultants as cybermediaries.