- Why didn’t anyone think of it before?
The latest step by the Federal Board of Revenue might be praiseworthy, but the initial reaction is one of incredulity. It should make sense for taxmen to trace commercial and industrial connections, but this has not been done till now. In the drive to fulfil the revenue collection target set at the IMF’s behest of Rs 550 trillion, the CBR has obtained from the Water Ministry the details of commercial and industrial consumers and tallied it with its own records of taxpayers. Apparently a logival first step, apparently it had not been done before.
It seems that there are 267,426 industrial consumers who are unregistered for any kind of tax. They have obtained neither national taxation numbers nor sales tax registration numbers. This is against a mere 26,512 who have obtained NTNs and 25,871 who have obtained STRNs. There are no less than 2.52 million unregistered commercial consumers, of which 37,146 have obtained NTNs and 36,732 have obtained SRTNs. The reason these figures are mind-boggling is because they show how feasible it is to obtain a commercial or industrial connection, which mandates that the person is engaged in taxable activity, without actually paying any tax. It should also be clear that this is not the result of an honest mistake, but of vast and virtually institutionalised looking the other way not just by taxation authorities, but also electric distribution companies.
The identification of possible tax evaders is a positive step, even if the real purpose is to pay off loans. However, it should be noted that the figures given do not include K-Electric consumers. That means that the survey has excluded the industrial and commercial capital of the country, and the point at which the bulk of its imports enter. Also, it must not be forgotten that one of the major contributors to so many enterprises remaining under the radar were corrupt taxmen. This should not become an opportunity for them to make a fresh pile so that those entrepreneurs can remain off the radar, and thus outside of the tax net. The result is that government has come up with ideas like that of a flat tax. This is might enable the CBR collect the target set it this year, but in future, it will have to obtain proper returns.