Tax gap of 7 trillion rupees: FBR Chairman: Chairman FPR revealed that there is a tax gap of more than 7.1 trillion rupees in the country. Announced strict action against those who do not pay taxes. Warned that 27 lakh people are not paying tax. Finance Minister Mohammad Aurangzeb declared other provinces as non-existent in the tax net. Also expressed the desire to take the tax to the GDP limit of 13.5 percent. The Finance Minister declared other provinces nonexistent in the tax net for increasing the tax rate. He said that the Islamic agenda has been started through the tax bill. The flaws in the system will be removed.
Mohammad Aurangzeb expressed the desire to take the tax to GDP gap to 13.5 percent in 3 years. We have been lingering as a country between 9 and 10 percent in terms of tax to GDP, and our limit is about 13.5 percent. Finance Minister Mohammad Aurangzeb blamed the middleman for inflation.
There are many loopholes in our system; there are still such cases. If someone has to pay a tax of a large amount, he uses consultants that have influence within FBR, and through these middlemen, the tax amount is negotiated to be half of what was to be paid. Secondly, out of a large number, only 15-20% of those who are filers lie in the tax net, and these people pay taxes and are also subjected to punishments and penalties of tax delay, while the majority of those who are non-filers enjoy seamless benefits of such a rouged system, which also demotivates the filers from paying taxes. If we have to do this documentation of the economy, then the biggest disease is cash in circulation, which is almost 9% of GDP in Pakistan and above the highest level in the world. If we stop the use of this money, then if we block it, it will automatically be in the documentation, and what we are trying to do with the restructuring of the project through data mining and data analytics is that if we stop using that money, then things will be regulated automatically.
Now the second thing is very important: how will you check the underfile and these accurate filings because you cannot go and audit each and every return, and even if you do, for which you are hiring external auditors, and you are making confidentiality agreements with them, then if you audit a taxpayer after four or five years, then how will you check what he does in between? The legislation that has been tabled in the National Assembly is for your high asset purchases. Vehicles and property are the places where this black money is dumped. Earlier, it was decided that if you are a filer or a non-filer, you could transact or not, and you used to be subjected to withholding tax. Now, an attempt has been made to impose a limitation on that as well, questioning eligibility of purchase. In simple words, if you have liquid assets of 1 crore in your wealth statement, which you submit as a filer to the FBR, then you cannot buy a property or vehicle worth more than 1 crore. If you want to buy a vehicle worth more than that, you will be made ineligible through technology, and your registration will not happen. Which will force people to use their money and acquire assets because you do not want to hide money under your bed.
The filings have gone up from 30 lacs to 50 lacs; people realized that maybe now they cannot stay out of these clutches. If we talk about ease of filing returns, many people have to file a simple return; you have to go to a consultant, hire someone, or hire a lawyer. We should make this process so easy that if a person is doing a job or not, you have to become a filer; you have to file your return, even if you don’t have any income. So make this process very simple so that anyone who comes, whether he has to pay tax or not, can easily digitize his details two-three times. He will give some details of everything, and the matter will be over; his return will be filed.