KARACHI: Taxpayers need protection against highhandedness and maltreatment of tax officials and in this regard the government should introduce taxpayers’ bill of rights to ensure confidence building of taxpayers.
The previous government of PML –N had constituted a Tax Reform Commission (TRC), which recommended a comprehensive set of proposals to bring visible positive changes in the tax machinery as well as for revenue generation.
The commission in its report in May 2015 recommended constitution of Taxpayers’ Bill of Rights to ensure taxpayers’ confidence on the government.
The commission in its report said in recent years collection of taxes has assumed enormous significance in Pakistan.
There is a national consensus that our survival as a self-reliant nation now lies with rapid and substantial increase in tax revenues. The general public and businessmen always view the “zeal” and “enthusiasm” of the Federal Board of Revenue (FBR) in collecting taxes with suspicion and distrust.
There are a number of reasons for this reaction.
Firstly, the highhandedness, maladministration, inefficiency, abusive behavior and corrupt tax practices of FBR’s officials have created a general atmosphere of distrust between the taxpayers and the State.
Secondly, the successive governments have failed to utilize the taxpayers’ money in a transparent manner. The ruthless waste and plundering of public money by the rulers has forced the people to openly defy tax laws.
The present situation of antagonism between the State and taxpayers needs to be reconciled through a process of national consensus.
National Tax Commission, comprising judges, professionals, and representatives of the taxpayers and tax machinery, should be a permanent body.
The goal of tax reform cannot be achieved through handpicked experts (mostly coming on donors’ dictates) who are completely oblivious to the mundane realities of Pakistan.
The decision to reform tax system and laws through FBR-backed tax reform committees, in which assignments have been given to ex-bureaucrats (who are in fact responsible for the present state of affairs.
The bad faith, antagonism and mistrust prevailing between the government and taxpayers can only be removed through a national reconciliation process.
A National Tax Commission should be a truly representative and competent forum that can provide a basis for a just and fair tax system in Pakistan.
The process of national reconciliation on tax matters will certainly require some time. As a first step, the Government for restoring the confidence of the taxpayers should promulgate Taxpayers’ Bill of Rights.
The TRC recommended that the provisions of the Bill must:-
– safeguard and strengthen the rights of taxpayers;
– ensure equality of treatment;
– guarantee privacy and confidentiality of their declaration;
– provide right to assistance by State in tax matters;
– guarantee unfettered right of appeal through an independent tax appellate system;
– provide facilities for independent judicial review of disputes with tax authorities.
The TRC further noted that there are flagrant and perpetual violations of established principles of taxation by the State, yet the people of Pakistan, who are the most heavily taxed in Asia, are being harassed every day by tax authorities.
It is high time that the Government should show a conciliatory gesture by promulgating the Taxpayers’ Bill of Rights.
Economic prosperity and eradication of rising poverty depend in generating substantial taxes.
All citizens of Pakistan who are liable to pay taxes should perform their national duty honestly and without any hesitation.
The State must ensure them full protection of their rights, transparency in utilization of taxpayers’ money and implementation of a just, equitable and fair tax system.
This Commission proposes that the government must present a comprehensive Taxpayer’s Bill of Rights in the parliament as soon as possible containing the following:
1. The strict implementation of constitutional guarantee of treatment and protection in accordance with law.
2. The strict implementation of constitutional guarantee that no tax will be levied except as provided under Article 77 of the Constitution of Pakistan and delegation of taxing powers to Federal Government and the Federal Board of Revenue being violation of Article 162 will not be provided and wherever available are to be withdrawn at once.
3. The implementation of constitutional right of protection of life and property as State’s prerogative to levy and collect taxes is conditional to performance of this duty.
4. The guarantee through a law passed by the parliament that taxes collected would be utilized in a transparent manner and would not be subject to unpitying waste and plundering by the rulers.
5. The right to have protection from higher/unjust/unreasonable taxes without voters’ approval.
6. The guarantee from the government through a law passed by the parliament of restricting state expenditure of revenue above and beyond inflation and population growth.
7. The guarantee of earmarking of revenue through a parliamentary process for employment generation and socio-economic development of the society as a whole.
8. The right to fair and consistent application of the tax laws of the state by the Department of Revenue.
9. The right to pay only the amount of tax due under the law and to have the law applied as consistently and equitably as possible.
10. The right of protection from abuse and excessive use of discretionary powers available to Tax Officials under tax codes. Such discretionary powers should be structured through open plans, open policy statements, open rules, open findings, open reasons, open precedents and fair formal procedure.”
11. The right to be trusted and treated as honest law abiding persons unless proved otherwise.
12. The right to be protected against perverse, arbitrary or unreasonable, unjust, biased, oppressive and discriminatory decisions, recommendations processes, acts of omission and commission of the Tax Officials.
13. The right to be protected against practices of tax collector involving the exercise of powers, or the failure or refusal to do so, for corrupt or improper motives, such as bribery, jobbery, favoritism, nepotism and administrative excesses.
14. The right to be saved from neglect, inattention, delay, incompetence, inefficiency and ineptitude, in the administration or discharge of duties and responsibilities by tax collectors.
15. The right to be saved from harassment through repeated notices, unnecessary attendances or prolonged hearings while deciding cases involving:
a) assessment of personal taxes;
b) determination of liability of any tax or duty;
c) classification or valuation of goods;
d) settlement of claims of refund, rebate or duty drawback; or
e) determination of fiscal and tax concessions or exemptions;
16. The right to seek assistance from the Tax Collector who should act as facilitator and not as Tax grabber. His office should be a walk in clinic especially for the old taxpayer, low income taxpayer or senior citizens who cannot afford services of the consultant.
17. The right to obtain information and prompt, accurate responses to questions and request for tax assistance.
18. The right to request assistance from an expert of the department, who shall be responsible for facilitating the resolution of taxpayer complaints and problems not resolved through the normal administrative channels within the department, including any taxpayer complaints regarding unsatisfactory treatment by department employees. The expert must issue a stay order if a taxpayer has suffered or is about to suffer irreparable loss as a result of an action by the department.
19. The right to have proper service of notices of any kind and application of all possible modes of service before passing ex-parte order/ assessment.
20. The right to have prompt refund of additional duty, return of Bank Guarantee or security in the cases of provisional assessments of duty where final assessment is not completed within the period specify under the law.
21. The right to be represented or advised by counsel or other qualified representative at any time in administrative interactions with the department.
22. The right to procedural safeguards with respect to recording of interviews during tax determination or collection processes conducted by the department.
23. The right to be treated in a judicious manner by department personnel.
24. The right to have audits, inspections of records, and interviews conducted at a reasonable time and place except in criminal and internal investigations.
25. The right to freedom from penalty attributable to any taxes administered by the Department of Revenue; and to abatement of interest attributable to any taxes administered by the Department of Revenue, when taxpayer reasonably relies upon binding written advice furnished to the taxpayer by the department through authorized representatives in response to the taxpayer’s specific written request which provided adequate and accurate information.
26. The right to obtain simple, non-technical statements which explains the reason for audit selection and the procedures, remedies, and rights available during audit, appeals, and collection proceedings, including, but not limited to, the rights pursuant to this Taxpayer’s bill of rights and the right to be provided with a narrative description which explains the basis of audit changes, proposed assessments, assessment, and denials of refunds; identifies any amount of tax, interest, or penalty due; and states the consequences of the taxpayer’s failure to comply with notice.
27. The right to be informed of impending collection actions which require sale or seizure of property or freezing of assets, except jeopardy assessments, and the right to at least 30 days’ notice in which to pay the liability or seek further review.
28. The right to have all other collection actions attempted before a jeopardy assessment unless delay will endanger collection and, after a jeopardy assessment, the right to have an immediate review of the jeopardy assessment.
29. The right to seek review, through formal or informal proceedings, of any adverse decisions relating to determinations in the audit or collections processes and the right to seek a reasonable administrative stay of enforcement actions while the taxpayer pursues other administrative remedies available under tax law.
30. The right of access to his tax information/record kept confidential unless otherwise specified by law.
31. The right to procedures for retirement of tax obligations by installment payment agreements which recognize both the taxpayer’s financial condition and the best interests of the state, provided that the taxpayer gives accurate, current information and meets all other tax obligations on schedule.
32. The right to procedures for requesting cancellation, release, or modification of liens filed by the department and for requesting that any lien which is filed in error be so noted on the lien cancellation filed by the department, in public notice, and in notice to any credit agency at the taxpayer’s request.
33. The right to procedures which assure that the individual employees of the department are not paid, evaluated, or promoted on the basis of the amount of assessments or collections from taxpayers.
34. The right to an action at law within the limitations to recover pecuniary damages against the state or the Department of Revenue for injury caused by the wrongful or negligent act or omission of a department officer or employee.
35. The right to settle claims through Alternative Dispute Resolution (ADR).
36. The right to have the department begins and completes its audits in a timely and expeditious manner after notification of intent to audit. The selection of case for audit should conform to the provisions of section 24A of General Clauses Act of 1897.
37. The right to have the department actively investigates and, where appropriate, implement automated or electric business methods that enable the department to more efficiently and effectively administer the revenue sources of the state taxpayers.
38. The right of waiver of interest that accrues as the result of errors or delays caused by a department employee.
39. The right of free educational activities/services to be arranged by the State helping the taxpayer for satisfactory/successful compliance of the revenue laws.
40. The right to pay a reasonable fine or percentage of tax, whichever is less, to reinstate an exemption from any tax which a taxpayer would have been entitled or received but which was lost because the taxpayer failed to properly register as a tax dealer or obtain the necessary certificates entitling the taxpayer to the exemption.
41. The right to be treated courteously and professionally by Department employees and to be answered as promptly as available resources permit.
42. The right to receive a simple, non-technical explanation rights and the Department’s obligations in all proceedings and activities involving taxpayers.
43. The right to have personal and financial information kept confidential and to know why the Department is asking for information, how that information will be used, and what might happen if it is not provided. The Department may share information with certain federal, state, and local government agencies under strict legal guidelines.
44. The right to obtain basic information concerning the basis for and amount of any tax, interest, and penalties owed or refunded when sent a tax due, deficiency, or refund notice.
45. The right to obtain information about tax exemptions for which a taxpayer legally qualifies. The Department will make every effort to inform those eligible for such exemptions.
46. The right to have penalties abated for under payment of tax due to erroneous Department advice in written response to a specific written inquiry, provided that the taxpayer gives the Department complete and accurate information.
47. The right to enter into installment agreements in case of hardship at the Department’s discretion in order to facilitate collection of payments due. The Department may require financial statements prior to and during the administration of such agreements and may cancel such agreements in the event of default or change in the taxpayer’s financial condition.
48. The right to online and telephone assistance through a website and tool-free telephone network, responsive to answer any query by a taxpayer.
49. The right to have honest, competent, efficient, well behaved and trust worthy tax officials.
50. The unfettered right of appeal or review through an independent judicial tax appellate system and guarantee of disposal of appeal and revision within six months from the date of filing such appeal or revision as the case may be.