ISLAMABAD: Prime Minister Shahid Khaqan Abbasi has unveiled five-point radical reforms aimed at bringing more people into tax net.
“Only 700, 000 people pay income tax from across the country and of that many have no option but to pay it. About 500,000 people pay zero tax,” said Prime Minister Abbasi while addressing a press conference in Islamabad.
“We have decided to take radical reforms. It is the biggest obligation of a citizen to pay income tax so that the country could be run effectively. Non-payment of income tax is a criminal act. When people who can afford don’t pay taxes in our country, the undue burden is shared by others through indirect taxes, which is an unfair system of taxation.”
The prime minister said that there would be five basic elements of these reforms.
Use of technology
“Modern technology will be used to collect more taxes. Traditional method of tax collection will be avoided and those who don’t pay taxes will face government’s action,” he said.
CNIC is your tax number
The prime minister said that any citizen who holds a valid computerized national identity card will be allotted the same tax number.
“The CNIC will be the tax number. We have 120 million CNIC holders. All can become the tax payers by simply filling a form,” he said.
Income tax rate to become sustainable
“It has been decided to reduce the income tax rate substantially. Those earning Rs100, 000 a year will be exempted from the income tax. There will be pay five-percent tax on income up to Rs2.4 million a year. There will be 10 percent tax on those who earn Rs4.8 million annually. “It’s a substantial tax reduction. We hope people will start paying taxes now,” Mr. Abbasi said.
One-time amnesty scheme launched
He said that it was mandatory to announce an amnesty scheme to widen the tax net.
“We are announcing one-time amnesty scheme for those who have evaded taxes. We believe that those who are citizens of Pakistan should be given the opportunity to whiten their assets. There will be five-percent penalty to bring the money into tax net. It will a one-time penalty.”
Politicians, he said, are not entitled to this scheme.
Prime Minister Abbasi said those who own assets abroad will have to pay two percent penalty to whiten their money. “If you bring $100, you will have to pay $2 as tax and i you maintain a USD account in a foreign bank, you will have to pay five-percent tax,” he added.
The amnesty scheme will be effective till June 1, 2018.
“The current databases are in isolation. We are trying to merge them. The government will have visibility of every transaction a citizen makes. We will be able to tell every detail of your transaction including payment of bills, school fee, shopping and foreign trips etc,” he added.
Story first published: 5th April 2018