15 Million High Earners Remain Tax-Free, FBR Chairman Reveals
15 million individuals, including those with agricultural income, are currently not paying taxes in Pakistan, according to the Federal Board of Revenue (FBR) Chairman, Zubair Tiwana. This revelation came during a Senate committee meeting, where Tiwana explained the challenges of imposing taxes on low-income individuals and highlighted the need for these potential taxpayers to fulfill their obligations. Despite agriculture contributing significantly to the national income, it doesn't contribute much to tax revenue. The committee also discussed counterfeit currency, with concerns about fake notes and the possibility of transitioning to polymer currency. Unauthorized bank account withdrawals were also addressed, with a reported fraud case involving multiple accounts.
Karobar
Islamabad: In a startling disclosure, the Federal Board of Revenue (FBR) Chairman revealed that a staggering 15 million individuals, which includes agricultural income earners, are currently not contributing to the nation's tax revenue. This revelation came during a Senate Standing Committee on Finance meeting chaired by Senator Saleem Mandviwalla.
FBR Chairman Zubair Tiwana, addressing the issue, stated, "This figure represents a significant portion of the population that remains outside the tax net." In response to questions, Tiwana explained that imposing taxes on low-income individuals, who make up 65% of the population, was not feasible.
However, he expressed optimism that the tax deficit could be substantially reduced if these 15 million potential taxpayers fulfill their obligations. Tiwana noted that the number of taxpayers had reached 4.9 million, with 1.2 million people added to the tax net just last year.
Despite agriculture contributing 40% of the national income, the sector itself doesn't significantly contribute to tax revenue, according to the FBR chairman. Furthermore, he highlighted that a significant number of housewives in Pakistan are not included in the tax system, suggesting another potential area for tax expansion.
Tiwana also mentioned that provinces have struggled to generate tax revenue from agricultural incomes. In addition, the World Bank has recommended taxing real estate and agriculture while lowering the exemption threshold for personal incomes. However, there has been no formal communication on this matter between the World Bank and the FBR.
When asked about the possibility of taxing agricultural incomes, Tiwana stated
"There is no proposal under consideration to lower the exemption threshold on personal income."
During the committee meeting, Senators Kamil Ali Agha and Mohsin Aziz requested a briefing on the tax collection process and the contributions from both direct and indirect taxes. The committee also expressed interest in understanding the impact of smuggling on tax evasion.
Senator Farooq H. Naek criticized the government's policy of providing electricity bill subsidies to the affluent, arguing that such practices foster inequality and insisting on equal treatment for the rich and the poor.
The meeting also addressed the issue of counterfeit currency notes, with concerns raised about counterfeit Rs 1,000 denomination notes and even ATMs dispensing fake currency. The State Bank of Pakistan (SBP) Governor, Jameel Ahmed, assured the committee that security features for currency notes were being enhanced to combat this issue. Additionally, the SBP plans to introduce polymer currency in the future as a further step to discourage counterfeit currency.
The committee also discussed cases of unauthorized withdrawals from private bank accounts, including a reported fraud involving multiple accounts. The SBP governor clarified the actual amount involved and the actions taken against the responsible bank manager. Representatives of affected families claimed a higher amount was involved, but a positive development was the restoration of Rs 270 million to the victims' accounts within six weeks.
