ISLAMABAD: Syed Shabbar Zaidi, Chairman, Federal Board of Revenue (FBR) has said that voluntary compliance failed to generate revenue.
“The voluntary tax system has failed to deliver and such system cannot run on a sustained basis,” the chairman said on Tuesday while addressing All Pakistan Chambers Presidents Conclave.
The chairman said that the existing taxation system as ‘extortionist’ and said the FBR was collecting 90 percent taxes in the shape of withholding taxes and deduction at source while only 5 – 10 percent was coming through voluntary compliance.
He said that total wholesale and retail traders are contributing Rs 9 billion from all over the country. He further added that Sundar Industrial Estate, which is not exempted from registration of sales tax, is contributing ‘very negligible’ amount to the national kitty.
Zaidi also pointed out that the FBR was collecting 45 percent on imports. He also added that the FBR cannot be fixed with sacking and transfers of officers but it will have to be automated to minimize human interaction as much as possible.
The chairman said that the tax authority had so far collected Rs 2,085 billion in first half (July-December) of 2019-2020.
He stated that the FBR is facing one major problem on customs side as there is still difference of $1.7 billion in bilateral trade figure, which shows that under-invoicing is still continuing that once stood in the range of $6 billion per annum.
He said it is not possible for any human to check 8,000 containers daily so the solution is the installation of the latest scanners. “We need to place automation as there is no other solution,” he added.
The chairman FBR said that there are four major sectors contributing to the country’s GDP growth and economy including manufacturing, agriculture, services and retail trade and wholesale.
There should have been 25 percent burden on each of these four sectors but in Pakistan manufacturing sector is bearing this burden by contributing 70 percent to national kitty. This tax burden, he said, is resulting into de-industrialization.
Ideally, he said the tax burden should have distributed equally on four major contributors of the GDP growth.
He said that the government is the partner of 25 percent in the shape of collection of taxes from the private businesses.
