Prof Dr M Hussain KHan Every government has shown its desire to expand the tax net but no serious or concerted effort has been made by any political party or bureaucracy in this regard. The present government tried to take some steps to increase the number of tax payers. In this regard the government first imposed 0.6% withholding tax on bank transaction for non-tax payers and non-return filers. But, government was compelled to reduce withholding tax from 0.6% to 0.3% with certain conditions that the traders and business community will file tax return. The strong stance of the traders and business community to stop all transactions through bank and to conduct business using cash only was very risky. In order to encourage the traders and business community, government has also introduced tax amnesty scheme to whiten their money by paying one time 1% tax only. It’s high time that govt thinks twice as to why people are so scared about coming in tax net. In the population of 220 million people, only twenty eight lac people have filed their returns this year and again majority of them are from salaried class. This is a huge question mark on the efficacy of the system. Question arises as to why a common man is so reluctant to come into the tax net? This question must be answered in true spirit and letter. It is true that once a person is within tax net or has filed returns, they receive most of the notices from the tax department and the tax people are constantly keeping close eye on them. I can quote example of one of my close relative who is regularly paying reasonable amount of income tax on his income and regularly file tax returns, for more than twenty years now. Once he bought an ordinary car which was registered in his name in Islamabad, but to his utter surprise within a week of the registration of that car, he received a draconian notice from the tax department saying that since you have purchased a car worth 15 lacs, therefore, this amount shall be added to your income. This person had to go through great pains to explain a very simple notion to the highly educated tax department. It took a lot of communication to explain that he is a regular taxpayer quoting his national tax number and the price of the car which tax department had mentioned in their notice and explaining to tax department as to why it should not be added to his income. Similarly, I can quote many people known to me, who pay their taxes regularly but still are being grilled by tax department from time to time. Once a person enters the tax net, then it is a never ending ordeal, one would never know when he/she will receive notices from the tax department even after paying tax with honesty. This attitude of tax department is not only sheer waste of time of both the tax department and the poor tax payer, but also has a negative effect on the prospective tax payers. Imagine how many expensive cars worth millions of rupees are registered daily in various cities of Pakistan, by the people, who are out of tax net and have never paid any income tax. And if the tax department is so efficient why these people are not brought in to tax net. Had the tax department shown some efficiency and honesty, the number of people in the tax net would have gone into tens of millions but for the reason best known to the tax department such people are never touched by the tax department. Then there are people who own plazas situated in every small or big cities of Pakistan. Majority of the owners of these properties are not paying any taxes on the rent received. Why the tax department keeps mum on this source of income?. In order to broaden the tax base, the government should introduce the following measures: 1- Govt must issue clear instructions to the tax department not to issue any undue notice/notices to that taxpayer who pays tax regularly and files return voluntarily. In case of any breach of these instructions the concerned person shall be taken to task and aggrieved person shall be compensated. For this purpose government should establish a complaint office where such complaints are entertained and prompt action is taken within 15 days. 2- Government should issue a card system for the regular tax return filers with following category. a) Govt shall issue a PLATINUM card to those taxpayers who are regularly paying their income tax and filling their return for the last two decades, with minimum tax of average amount of Rs 50000/= per annum. This shall entitle them to certain facilities like the use of VIP lounge at the airport, reservation of special beds in the tertiary care govt hospitals, etc. Such individual shall be totally exempted from the deduction of withholding in the bank. b) In the next category those taxpayers who are paying income tax for the last fifteen years past at the average rate of Rs 40000/-Rs 50000/= per annum, they shall be issued GOLD card which they will be entitled to certain facilities like VIP treatment at certain places like airport, or any other govt facilities like govt guest houses etc. 3-Apart from the above mentioned facilities for the existing taxpayers , govt should crack down on those who can afford expensive vehicle for their use but do not pay income tax. For the purpose govt can easily get hold of individuals in whose name car/cars with more than 1000 cc is/are registered with the car registration authority and is not tax payer. The number of such individual is in millions. In this way such individual can be easily brought in to the tax net, that may be driver or any person in whose name such a vehicle is registered. 4- Some time an excess amount of income tax is deducted from the taxpayer, while getting back the refund from the tax department, it is uphill task. Govt must take measure so that any refund of those who are regular taxpayers shall get refund back without any hassle. 5-Corruption in the tax collection department: while there are a few honest people in the tax department but there are others who are highly corrupt and it is due these people that majority of the people would avoid paying income tax with the convenience of these corrupt people. Govt must take stern action against people in the department. If the govt has got the will, it is not difficult to evolve a mechanism and probe the corruption of such individual in the tax department. 6-In the first crack down the owner of private cars with more than 1000cc power engine shall be asked to show his source of income and if he/she is not in the tax net, shall be asked to file the return. In this way many more people will come in to tax net, that person may a driver or the real owner. 7-Govt should drastically bring down the income tax rate so that more people are encouraged to pay their taxes. 8-Agriculture income tax is a big dilemma up till now and no serious efforts have been made to bring big landlords in tax net. This not only deprives state of huge revenue but also discourages those who do not have agriculture income and drive their income from other sources, on which they have to pay income tax. Therefore it is high time that the govt must take concrete steps and impose income tax on those who have got more than 12.5 acres irrigated land. In this way not only these big landlords will come in tax net and will pay tax but will also help overcome the problem of hiding black money in the garb of agriculture income. The above are a few of my humble suggestions and I believe that every conscientious, god fearing and patriotic citizen of this country who is currently paying a huge amount of tax thinks similarly. I hope and pray that the concerned people in corridors of power will pay heed to this. Time is running short and the economic perils looming ahead in our face. If we miss this opportunity of tax reforms, we may not have another one. — Professor Dr M Hussain Khan is a freelance writer and can be reached at Hussaindr44@gmail.com.