The government is likely to introduce measures to include majority of the withholding tax (WHT) paying but non-tax complying people in the tax net and is considering establishing a border security force to replace numerous agencies to regulate the movement of people and goods during the next financial year.
An official source told Pakistan Today that the conversion of the computerized national identity card (CNIC) as national tax number (NTN) will be utilised as the most vital tool to bring majority of the non-compliant tax returns filers in the tax net. The payment of WHT will form the basis for inclusion in the tax net.
It is important to mention that the replacement of NTN with CNIC was one of the major conditions of the International Monetary Fund (IMF) to increase the number of tax payers in the country. Out of the 200 million population of the country, only 800,000 people pay income tax.
The government, he said would broaden the narrow and shallow tax net by including the WHT payers in the tax net. At present, the structure of income tax is heavily based on WHT as is evident from gross collection which has increased to Rs 275 billion or 64 per cent during the first six months of the current fiscal year.
It has been proposed to the government by experts as well as IMF that identification of WHT payers is simple and they should be hooked to increase tax compliance in the country. The major contributors to WHT include salary, mobile phones, imports and exports, bank interest/securities, cash withdrawals, dividends and electricity bills.
In order to curb smuggling and promote regional trade, the government is considering establishing border security force that will replace all other agencies in regulating the movement of the people and goods across the borders. Initially, the scheme is likely to be implemented along Afghanistan and Iran borders.
The government is also considering notifying estimated real estate prices for different localities to charge taxes but the finalization of the proposal will be done in consultation with provinces. The estimate price will be maintained for a year to determine the exact taxes. Real estate sector is considered as the major tax evading sector along with agriculture sector.
The source said the government had dropped the idea of single stage GST imposition. The idea was under discussion to avoid the refund problems of the genuine tax payers but had to be sidelined due to the non-availability of data to assess it impact. The government source said that they were considering to provide facilities to the honest taxpayers and has directed that the honest tax payers should not be burdened and harassed.