ISLAMABAD: Finance Minister Shaukat Tarin urged unregistered potential taxpayers in the country to start paying taxes before “we reach you” with details of their assets and the amount of tax they were liable to pay.
Addressing the launching ceremony of National Sales Tax Directory by the Federal Board of Revenue (FBR), the minister regretted that just around three million tax returns were filed in a country that had a population of 220m.
“This is not right,” he said, adding that “I assure you this will start changing.”
Tarin said the government would now use technology to reach all persons liable to pay taxes.
“I am giving this good news to unregistered taxpayers that we will reach them in the coming few weeks and we will tell them what’s their income and how much tax they have to pay,” he added.
He said the government would no longer have to issue notices for tax collection as it had collected data of “millions of taxpayers”.
“We will go to them [unregistered taxpayers] with data and provide them with [the details of] their tax returns. We will connect them with a panel of auditors from the private sector for consultation if they believe there is some error [in the details provided to them],” the minister explained, warning that if a person still wouldn’t pay taxes, “the law will take its own course”.
“As I had promised earlier, there will be no harassment [for tax collection],” he added.
The minister said he was giving this “good news as the government has almost reached them [unregistered taxpayers], and it now only needs to turn on the switch”.
“So it is my request to start paying taxes before we reach you,” Tarin said, adding that the government would deal with unregistered taxpayers “on the basis of concrete data and not assumptions”.
“It’s time that we fulfil our responsibility and start paying taxes,” he stressed, adding, “I promise you that if I stay in this position, all persons will not just have to pay income tax, but also sales tax. Because it is the need of this country.”
He said 220m people of this country were in need of houses and jobs, and the government was unable to help them because it lacked resources.
“Our tax to GDP (gross domestic product) [ratio] is around nine to 10 per cent and our current expenditure adds up to 12-13pc. We have to take loans for the payment of our current expenditure and take more loans for other development initiatives,” he said, adding that “this cannot work”.
Assuring citizens that their tax money would not be misappropriated, he termed the low tax to GDP ratio as the “fundamental problem” of Pakistan. This ratio, he said, would further decrease to around 11.5pc after the rebasing of the economy.
This means, Tarin explained, “that in effect, we don’t pay taxes”.
The minister said the government would launch platforms such as Sales Tax Directory by the FBR to facilitate the payment of taxes.
“But you will have to pay taxes,” he added. “The tradition of ducking tax payments will have to end.”
He urged people to “look around yourself and see how many people need the government’s help”.
“But how can the government help them if it does not have resources?” he questioned.
Tarin acknowledged that objections pertaining to the misuse of funds by the government may be raised by some, and “rightly so”.
However, both sides would have to work to make things right, he said.
“You start paying taxes and [then] hold us accountable … you do your work and we will do our work.”
‘Single platform for tax payment’
Earlier in his speech, the minister congratulated federal and provincial revenue divisions for coming on a single platform and making payment of revenues easy for taxpayers through the National Sales Tax Directory facility.
He said sales tax on goods being a federal domain and sales tax on services coming under provinces was creating hardships for taxpayers.
Now, under the single platform, the taxpayers would be facilitated, Tarin said, adding that under the previous system, if a company was operating in multiple provinces, it had to deal with more than one agency for filing returns, which increased the chances of errors.
However, now they would be required to file a single tax return under the new system, he said.
“This is the progressive way of tax collection,” Tarin said, adding that the measure would lead to an increase in the revenue collection.
Finance supplementary bill
Speaking about the Finance (Supplementary) Bill 2021, the minister said the legislation, which would lead to the withdrawal of tax exemptions worth Rs343bn, was not aimed at increasing tax collection but rather ensuring documentation.
He said the legislation would “connect the broken chain of the VAT (value added tax)”.
