KARACHI: Dr Mohammad Shoaib Suddle, Federal Tax Ombudsman (FTO) on Thursday stressed the need for promulgating "taxpayer’s bill".

He was speaking at a seminar "Measures to Enhance Transparency in Tax Collection and Role of FTO" organized by Transparency International Pakistan at a local hotel here.

He said the core purpose of the FTO is to diagnose, investigate, redress and rectify any injustice done to a person through maladministration by functionaries administering tax laws and termed it as mandatory for good governance.

He said the FTO office is making all-out efforts to avoid cumbersome and lengthy formal procedures for seeking justice by taxpayers besides adopting unbiased and professional approaches to decide matters. He said the office has set a target to resolve around 60 percent of total 1600 complaints received by the office annually in 60 days.

He urged the top guns of the Federal Board of Revenue to oblige recommendations of the FTO office within 30 days to provide maximum relief to taxpayers.

Suddle said the FTO office has decided all taxpayers' complaints pending from 2005 to 2009 and added that some 805 complaints were decided through suo moto notices in 2010. He said around Rs one billion were refunded during last six months, which is more than the tax refund paid from 2005 to 2006.

He said the tax-to-GDP, which was 13.8 percent in mid 80's, has drastically declined to 8.8 percent in last year, which cost around Rs700 billion to Rs800 billion to the national kitty annually.

He said the level of tax compliance is abysmal in Pakistan as there are only two million registered taxpayers, which is not more than one percent of total population. He emphasized on the concerned authorities for effective enforcement of the rule of law to improve revenue collection.

Suddle said if the prime authorities of the State including parliament, judiciary, tax ombudsman, etc, did not play their role in providing integrity system to the masses, they would be exposed.

He said bureaucracy is responsible for the country's current deteriorating condition, adding that: "the bureaucracy is a major actor for the mess the country is facing, which must be changed."

He said the board has to take remedial measures for resolving taxpayers' issues and if it failed, taxpayers should be guided to approach the FTO for the purpose.

He said: "if we really want to improve tax collection, we need to treat taxpayers fairly." He told the tax authorities that the FTO office would not tolerate any maladministration.

He asked the Transparency International Pakistan to conduct a third party review of the FTO office, which would definitely help improve the performance of the office and also urged the authorities concerned to make a comprehensive and reasonable tax system for bona fide taxpayers.

In his keynote address, Sohail Ahmad, chairman, FBR said the World Bank has given satisfactory remarks on the progress of Tax Administration Reform Project (Tarp) and has offered to extend the project till 2012.

He said the national corruption perception index of Transparency International Pakistan for 2008 has reflected the positive growth of the FBR as the income tax and customs department, which stood at 3rd and 5th positions in 2002, are now holding 8th and 9th positions.

He lashed out at the tax facilitation policy of the former FBR chief, saying that the amnesty scheme, which was one of the best examples in the regard, was not only fruitless but also created adverse impact on tax-to-GDP ratio.

Sohail regretted that only 2.7 million taxpayers including salaried persons are registered with the tax department, of which, some 1.6 million taxpayers file nil returns. He stressed the need for developing sense of duty in tax collectors and taxpayers.

He said there are hurdles including tax leakage, tax avoidance, tax evasion, corrupt tax practices and exemption culture, which annually cost Rs700 billion to the exchequer.

Moreover, he said politicians are also responsible to promote SRO & exemption culture as they are using their influence to pressurise tax department to grant exemptions to their favorites.

He said the enforcement of VAT/reformed GST is an attempt to eliminate all these hurdles besides bringing retail sector into the tax net, which is presently not paying taxes, despite formal agreement with tax department in 90's.

Sugar mafia through political influence is providing revenue loss of Rs2 billion per day.

He said the tax collecting authority has planned to draw a guideline for commissioners in the selection of cases for tax audit and the board would take stern action in case of its violation.

Munir Qureshi, member, customs clarified the issues relating to Pakistan Automated Customs Clearance System (PaCCS) raised by Adil Gilani, chairman, Transparency International Pakistan, saying that the department is not planning to roll back automated system but to eliminate the role of Agility, a UAE based software developer in it.

He said the replacement of Agility software with Web Based One Customs (WeBOC) is on interim basis as the board is keen to induct international software developer in this regard.

Munir also dispelled the impression that 11,000 containers belonging to ISAF disappeared without payment of custom duties and taxes amounting to over Rs. 200 billion, saying that the issue was wrongly reported by media as only 48 containers were cleared.

Adil Gilani said if corruption could be eliminated in revenue collection, Pakistan would not have to borrow from foreign donors. He recommended the application of rule of law across the board without discrimination in the FBR. He commended the performance of the FTO, who has cleared all cases in just one year.

Khail Ahmad, fellow member of Chartered Institute of Management Accountants of UK said there is greater tendency of non-declaration of income by individuals, self employed and small traders.

This is mainly due to strong perception that exists in the minds of this class that there is rampant corruption in the taxation departments and that once you are on their tax net, you are in trouble for ever and due to the vast discretionary powers and complex rules, you have to buy your legal rights by hiring legal experts and offering bribe to tax collecting agencies.

The most fearful thing is that there is a strong belief that rules can be changed overnight with its retrospective applicability as has been the case in other areas of the governance. These all perceptions seem to have played some part in keeping the registered number of taxpayers low.

He suggested the board to enlarge the tax net by including individuals, self employed and small businesses and also provide friendly attitude to the first time filers by ignoring their small and innocent omissions.

Earlier, Nazim Haji, industrialist/social activist said the FBR could not broaden the tax base unless the taxpayers would give value in returns and added that the FBR follows the policy of isolation, which should be diverted towards inclusion to portray the true image of the board.

He also recommended the board to utilize its IT expertise for monitoring of its officials, which would not only boost the performance of the board but would also help provide relief to taxpayers.