October 22, 2020

History Of Tax Collection In Pakistan And The Recent Amnesty Scheme

Tax collection has always been a hectic task for all the governments of Pakistan. In a country of almost 220 million people, less than half a million people pay their taxes. This is a problem that no government has been able to solve so far.

FBR argued that the self-assessment system is the main cause of low tax collection in the country. Late General Zia-ul-Haq introduced the scheme, providing a facility of no audit if the tax filed in the present year is more than the tax filed in the previous year. However, General Musharraf started the universal assessment scheme, where filers could file zero tax with the mandatory condition of audit.

FBR in the month of April 2019, advised the government to opt for a fix tax amount policy, where the people would be taxed a fixed amount calculated according to the units of electricity they consume. Tax can then be deposited to any bank and can even be deposited in two installments. FBR argued that the scheme would be popular among the people as it will relieve them from the constant fears of raid from the FBR officials.

On a statement on Monday 24 June, the Federation of Pakistan Chamber of Commerce and Industry (FPCCI), said the government has its full support in the recent amnesty scheme offered by Imran Khan.

The president of FPCCI Daroo Khan Achakzai said in a statement, “One percent of Pakistanis are bearing the weight of 220 million people”, he further said that, “No country can serve its people if tax-evaders are not brought under the tax net”.

The government has given a recent deadline of 30thJune 2019, to avail the benefits of this amnesty scheme. The experts advise the people to avail the recent opportunity provided by the government and avoid facing the consequences.

Experts suggested Pakistan’s government to follow the footsteps of the Indonesian government. In 2016 the Indonesian government brought almost 740,000 people in the tax net with almost $330 billion coming into the system, through an amnesty scheme.

The officials of FPCCI said that, people used to take their money out of the country because of the law and order situation and now, when the law and order situation has improved greatly, people should start bringing their income back into Pakistan.

Overall, the conditions of Pakistan simply cannot improve without increasing the tax net. But, the tax collecting body of the government should also be free from corruption and political interference, so that the businesses can work without pressure from the corrupt officials. According to FPCCI official, Iftikhar Malik, the taxation system and growth of businesses must to go hand in hand and it can only happen through a fair taxation system.

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