Actual plan to tax base.
Prime Minister of Pakistan's recent interview to New York based international news Agency 'Bloomberg' on increasing the tax net of Pakistan by using data (NADRA) National Database and Registration Authority as a plan to broaden the tax base is viewed with less appealing. As the said plan will bring negligible results to ultimate objective of increasing tax revenue to GDP Ratio. How the NADRA data can be utilized to increasing tax revenue is technically flawed with wastage of time and resources. Through CNIC Number the actual income or production potential can never be ascertained too exactly, it will rather invite the possibilities of misusing and harassment on the basis of assumed data.
As a matter of fact, here we have main one issue of how to increase the tax revenue which commonly viewed can be achieved by just increasing the tax base.Putting all efforts through engaging already overloaded tax officersin that way is by sure a useless effort (wild goose chase). If the Government's ultimate objective is to increasing tax revenue then why to focus on it narrowly? In this nod, we come across two main issues: as firstly how to increase the tax base and secondly how to increase tax revenue. In the same context, the Government failure is on two counts: i) Its failure to understand that tax net could be enhanced by NDRA data; ii) its failure to understand that by increasing the tax base, the tax revenue will naturally be enhanced. To the understand of Government, the significant strategy to increase the net is, however, to target Utility data: the electric and Gas consumption data must be collected and evaluated in respect of Commercial activities and those found unregistered having substantial utility consumption must be registered forthwith; secondly team surveys of field formation must be carried out after every quarter of year in each area jurisdiction with this those who have been carrying on business as unregistered will be identified and be brought in net by registration; Thirdly the business transaction with unregistered must be charged with at least 10% further tax instead of prevailing 2% on charging by unregistered which will drive them to get registered by own will.
Let it be clear that the Increasing tax base will not necessarily meet target of increasing tax revenue as the sticking point is that of tax payers attitude towards paying tax . Particularly noteworthy is to create tax paying culture and mindset. How much numbers of taxpayers be, but is not necessary that the revenue from the tax may achieve exponential growth.
What point worth focusing is,the need to address the issue of 'Trust Deficit' between Government and tax payers. Until any Government creates tax paying attitude no tax revenue can be increased despite putting all efforts to increase tax net merely. Now the question arises how to develop tax payment attitude? First and foremost our leadership has to set model for emulation. Those particularly as are in power corridor: the President, ruling Government Prime Minister with all his cabinet Ministers, MNAs, MPAs have to come out and set examples for the Business Community in particular and for public in general to pay in full all taxes(direct and indirect). They must declare their all business directly owned including family members and those having share; get all their business be audited honestly and transparently; must apply necessary force on the Federal Board of Revenue to conduct all their business audit and let them know if any even single Rupee tax due to them is, either evaded by design or default, to deposit in the National Exchequer. Secondly, Equally important to actualize in real sense of terms that tax payers amount is trust and be utilized for them in such a way that Public may see patently their tax is judiciously utilized for them in Education, Health, clean water and etc. Central problem here is only trust deficit between the Government and the Taxpayers. Thirdly, Submission of N.T.N and STR NO. Certificates, duly filed returns ( income tax and Sales tax) and 'Most particularly' last financial years Audit Reports conducted by Federal Board of Revenue (F.B.R) of each candidate must be made part of pre conditions for contesting election seat of Senate, National Assembly and Provincial Assembly.
Once the Government gets manifestly able to prove all in Power pay taxes, get all their business audited transparently, pay taxes more than any other common taxpayers (direct and indirect) and succeed to show public taxes are utilized for them and not for money laundering or extravagance that will be 'THE Day' all people from every nook and corner of country will come out by themselves not only to get registered whereby tax base increases but also pay the tax due to them without letting the Tax Machinery bother much to extract tax . As this nation is much self-made who love to live a dignified life simply on own taxes instead of luxuriant life on Washington aid.