Federal Board of Revenue seems to have come up with a novel idea. According to this newspaper, it is planning to make public the names of non-filers of income tax returns including business community, individuals, bank account holders, judges, chartered accountants, lawyers, consultants and other professionals through a tax directory to be published next month. Tax directory would also include names of NTN holders who are not filing their returns. A number of non-filers were regularly carrying out banking transactions involving huge amounts and are liable to file returns but are not complying with the law. These persons would also be included in the tax directory of non-filers. The persons liable to file returns include NTN holders, persons having taxable income, non-profit organisations, welfare institutions, persons who own immovable property above a specified land area, owners of motor vehicles with an engine capacity above 1000cc, holders of commercial/industrial connection of electricity, residents registered with any chamber of commerce and industry, trade or business association or any professional body, etc. It was also reported that the FBR will publish tax directory on the basis of its own data base, third-party information such as buyers and sellers of immovable properties, banking transactions, purchase of vehicles, etc. The CNIC numbers of non-filers will also be disclosed in the directory.

It is quite apparent that the motivating force behind the above idea is the desire of the FBR to bring all the non-filers of the country into the tax net in order to maximise the amount of direct taxes. Everybody would agree that this was a necessary step towards promoting equity in taxation, curb unjust practices, and increase the overall tax revenues from direct taxes to a respectable level. The increase in direct taxes would reduce the burden of indirect taxation which would spare the poor and ordinary people from heavy taxation on goods and services. The biggest advantage would, nonetheless, be the expected inclusion of most, if not all the potential taxpayers into the tax net by naming and shaming the non-filers.

While the FBR's plan may have positive aspects, it needs to be mentioned here that this is a gigantic task in every respect. To start with, it will be quite an arduous task to collect the needed data and publish the same. Secondly, the potential taxpayers in Pakistan are not easy targets and would not pay their due taxes easily. For instance, FBR has been regularly warning the persons owning immovable property above a certain limit, owners of motor vehicles and other non-filers to file their returns and pay their due taxes every year but these efforts have proved in vain and no worthwhile increase in the number of income taxpayers has been reported. It is clear that the potential taxpayers do not care about FBR warnings and continue to evade taxes. This may be due to the slackness of FBR or rampant corruption in the tax collecting machinery. We are of the view that the officials of the FBR, instead of undertaking such time-consuming exercises, should really work harder to identify non-filers, force them to file their tax returns and pay due taxes without any exceptions and regardless of the position of potential taxpayers. Black sheep should be removed from the system. FBR also needs to study the reasons of their failure where other countries have been successful in forcing the potential taxpayers to pay their due taxes. So far as naming and shaming is concerned, it is hardly going to make much difference in an environment where bank defaults and non-payment of bank loans/credits are seen as a matter of prestige rather a source of embarrassment.

Copyright Business Recorder, 2017