How to involve public in increasing tax collection.
Without going into big preamble, I would jot down my suggestions for evolving a national culture of tax payment.
It is most difficult part in any culture to motivate its people to pay tax voluntarily. However, when tax burden, its collection and utilization is made equitable and transparent, majority of people, if not all, would pay their taxes on time and in full.
Although my suggestions would not cover all aspects, yet, when implemented these would definitely prove a major step forward towards establishing a society which pay its tax and feel proud of their contribution.
1. Recognize tax payers and their contribution by:
a) All those who pay personal income tax > Rs. 2.5 million in any one year should be on the list of invitees at President’s receptions. While all those who pay personal income tax > 1.0 million in any one year should be on the list of invitees at Governor’s receptions.
b) All those who pay personal income tax above Rs. 1.0 million in a year should be honored by nation by allowing them to fly national flag on their motor vehicles and at their residences.
c) Honorary magistrates should be appointed from the list of those who have paid personal income tax above Rs. 0.5 million.
d) Contribution of all personal income tax payers should be recognized by giving them national awards on 23rd March. Suggestions for honor list are:
Personal income tax payment > 5.0 million for 3 years consecutive – Nishan-e Kidmat
Personal income tax payment > 2.5 million for 3 years consecutive – Hilal-e- Kidmat
Personal income tax payment > 1.0 million for 3 years consecutive – Sitara-e-Kidmat
Personal income tax payment > 0.5 million for 3 years consecutive – Tamgha-e- Kidmat
e) All those citizens paying personal income tax > 1.0 million in any one year should be allowed one free arms license up to a maximum of three licenses.
f) All registered income tax payers should be allowed free registration at NADRA for NIC renewal/reissue.
g) Driving License fee of all registered personal income tax payers should be abolished.
h) All income tax payers should be allowed 25% rebate in car/motorcycle registration at the time of purchase, and 50% rebate for annual registration after they have paid income tax for three consecutive years.
i) All those who have paid personal income tax above Rs. 100,000 should be allowed free of cost new passport or renewal.
j) When appointing members of board of governors of banks/corporate bodies/Government institutions/University Syndicates, these should be selected from the list of citizens who pay personal annual income tax above Rs. 1.0 million.
k) All those Pakistanis sending remittances from abroad should also be recognized for their contributions. Some suggestions are:
1) All those who remit more than $10,000, should be allowed to recommend one of their family member in Pakistan for one free arm license.
2) All those who remit more than $25,000 should be allowed free passport renewal.
3) All those who remit $10,000 or more, should be given 2.5% bonus (or Rs.2.50 per dollar) as incentive to use official channels. This incentive should be paid as certificates of investment, cashable after five years. These certificates should carry 10% annual profit and be tradable on stock exchanges.
4) All those who have remitted $1.0 million or more in a year, should be allowed to hoist national flag on their homes in Pakistan.
l) Peace and Harmony committees should be formulated at police station level. Only income tax payers should be included as private members in these committees.
m) It should be made mandatory for all public office holders and all government employees to get personal income tax registration, even if their total income is less than minimum level.
n) It should be mandatory for all business accounts to provide national tax number. No bank should be allowed to operate any business account without NTN. All new firms, should be required to provide NTN within 90 days, otherwise their account should be frozen automatically.
o) All bank accounts where credit or debit balance exceeds Rs. 500,000 should automatically (same day) be reported to Income Tax department, unless banks already have NTN in their possession. This includes all type of investments, as well. In case of default, banks/investment institutes should be heavily penalized.
p) No property (plot/shop/flat/house/farm/agri land etc) should be registered without NTN of buyer.
q) No motor vehicle should be registered without NTN of buyer.
r) Retired persons with no income, continue to file their income tax returns for three years. This should be abolished. Need to file return after retirement should be finished. However, their NTN should be kept alive/valid throughout their life like NIC.
2. Tax collection system should be reformed. Apart from detailed overhauling of FBR, following changes should be announced immediately:
a) Chairman FBR should be an eminent person without any political affiliation and with experience of business management. He should be selected from private corporate sector. Appointment of Chairman should be for one term three years.
b) FBR should be given constitutional autonomy in operational matters.
c) An FBR Supervisory Board should be constituted whose remit should be to quarterly review FBR’s working and submission of quarterly reports to government of its findings and recommendations. This report should simultaneously be published on internet. This board should consist of Finance Secretaries of Pakistan and all provinces, Auditor General of Pakistan, two prominent chartered accountants (non-political) from private sector, Leaders of Opposition in Senate and National Assembly, Chairman Public Accounts Committee.