According to a press report the Federal Board of Revenue (FBR) issued notices to around 1,000 to 1,500 undocumented wealthy persons, asking them to file their income tax returns and wealth statements under section 114 and 116 of the Income Tax Ordinance 2001 respectively. Most of the notices have been served to the persons living in Lahore and other cities. It is interesting to note that FBR will only want to check the source of their income and their investments.
The FBR has gathered the information from third parties. Therefore, it is not necessary that FBR will take any legal action against them.
It is a known fact that the wealthy are not paying the income tax and wealth tax. Now the question is why the FBR does not want to take any action against those who have been not paying any taxes.
The other question is related with the discretionary powers of an income tax officer. How one can be sure that the verification of the income and wealth of those persons to whom notices are issued will be done properly?
As long as the system of collection of taxes is carried out with over 60 percent indirectly and only 40 percent is directly, there is likely no chance to expend the tax base and to collect the taxes from the powerful. Majority of the politician sitting in the assemblies are not paying any taxes although they are spending 10 million to 20 million on their election to become lawmakers. Pakistans economy is surviving due to black money and there have been many incentives and policies in the past to allow the people to legalise their black money.
The FBR should involve intelligence agencies to investigate those who have large amount of illegal money and are involved in fake accounts. As majority of the people of Pakistan believe their taxes and Zaqat money is not used for their welfare on education, health and public transport, they are reluctant to pay taxes.
The scrutiny of federal and provincial taxes is imperative to have an effective and transparent tax collection system. Those individuals who are paying the highest tax every year should be awarded with highest civilian award to encourage others to pay their taxes honestly.
S T HUSSAIN
Lahore