The intricacies and dilemma of tax collection and reforms.

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...