SRB adopts multi-pronged strategy to activate taxpayers

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KARACHI

The Sindh Revenue Board (SRB), currently focused on tax collection from service sector, has adopted a multi-pronged strategy to activate already registered but dormant taxpayers and expanding registered tax payers from 7,000 to 10,000.
Sindh Revenue Board (SRB) Chairman Tashfeen K Niaz said on Wednesday that equal attention is being paid to enforce tax deeper into the unorganised sectors through installation of point-of-sale machines with real time connectivity.
Building sustainable organisational capacity in tax administration with emphasis on human resource development and strengthening coordination with the federal government are also part of the strategy.
“The above cited measures are equally important to strengthen our tax collection growth and achieve tax collection target of 100 billion by 2017,” he said to a question.
To another query, he agreed that there existed potentials for additional tax collection of more than 50% to 60% through the reforms.
The SRB chairman said the board had already set a precedence by recovering Rs 34 billion against the target of Rs 32 billion in 2012- 2013 and is fast on its way to surpass recovery target of Rs 42 billion for fiscal year 2013-2014.
“We are fast on our way to register an increase of 31.25 percent in 2013-2014, against an increase of 28 percent for 2012-2013, in fact Feb 2014 has been the best month ever in the history of SRB as the collection for the month exceeded Rs 3.7 billion,” he said.
To a query, he said his organisation’s ability to accept challenges was consequent to the confidence reposed on him and his team by Chief Minister Qaim Ali Shah.
SRB, he said, plans to continue bringing untapped sectors into the tax net over the next two years.
“We believe there is a high potential for increasing stable tax receipts in the years to come by activating the dormant registered businesses,” said Niaz.
He agreed that critical interventions are needed at the strategic and operational levels to redress the challenges faced by SRB.
Referring to proactive role of the Sindh Revenue Board in expanding the tax base of sales tax on services, he said that almost all sectors, except for medical services, education, public transport and a few other representing unorganised businesses have already been covered in the SRB tax net.
“But then there is also a flip side as against a total of 7,000 plus business entities registered by SRB only 2,500 or so are active tax payers,” he said.
This can be attributed to overlapping taxation enabling many of the tax payers to refrain from paying the taxes to SRB.
Moreover, persistent ambiguity in the interpretation of businesses either as manufacturing or service driven entities is yet another deterrent in enforcing sales tax on services in the letter and spirit.
The SRB chief said undocumented transactions are also among series of challenges SRB is currently faced with as many of the small and even medium sized registered tax payers, who happen to be potential tax payers, have no formal accounting systems.
“This is reflected in the current trend of low ratio of actual tax payers to total registered businesses,” he said.
Niaz also referred to application of legal recourse as a delaying tactic registered to hinder SRB efforts to bring new sectors into the tax net.
Despite the express provisions of Article 199(4A) of the constitution and the decision of the apex Court that interim stay orders made by the courts in relaxation to state properties and public revenue ceases to have effect on expiration of six months from the date of the order.
“They have been very liberal and lenient in granting ad-interim orders in favour of the taxpayers which seriously affects SRB’s ability to collect revenue as proposed in the budget,” said the SRB chairman.
He acknowledged that Sindh Revenue Board has very limited access to valid and reliable data base on tax payers and consequently its ability to enforce tax is constrained.
About capacity of SRB with regard to qualified tax administrators, the chairman of the board said there was dire need for well groomed tax administrators so as to help in effective expansion of its operations.
“For fact, as of now the board has a total strength of about 150 incumbents across the echelons, which restricts its capacity to expand horizontally and vertically,” said Tashfeen.
He, however, mentioned that SRB has already taken cognizance of the required reforms and through concerted efforts has achieved its recognition as an independent board empowering it to become even more effective.
Consequently measures are underway towards resolution of operational ambiguities at multiple tiers while a comprehensive training curriculum has also been developed for SRB personnel.