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New tax directory

New tax directory

It might seem like a rather mundane affair, but the annual publication of the tax directory, which gives details of every taxpayer and how much he or she paid in the outgoing year, is a welcome development in the government’s effort to encourage a culture of filing tax returns.

Broadening the base of direct taxes is a crucial part of the revenue effort, and naming and shaming those who are making false declarations of their income is important.

Read: 1,040 lawmakers out of 1,169 filed taxes for 2014: Tax Directory

The tax directory has come under some criticism from people who believe that it is revealing sensitive and private information. Such concerns are valid in an environment of insecurity, where kidnapping for ransom is a widespread practice. But these reservations need to be balanced against the requirements of the revenue effort required to pay for the maintenance of law and order in the first place.

The directory lists many individuals, including politicians, known to be leading lifestyles that entail heavy expenses such as big cars and frequent foreign trips, but declaring very small incomes.

However, it is also important to realise that thus far the exercise of the annual publication of the tax directory, the second of which was published on Friday, is restricted to naming alone. The simple fact of publishing the directory is not enough. It is left to the media to pore through the long list of names contained in the directory, and conduct what amounts to media trials of those who are perceived to be mis-declaring their income.

Also read: About 200 top taxpayers awarded ‘privilege, honour cards’

The authorities putting out the report, particularly the Federal Board of Revenue, should go a step further and issue a small comment on the overall exercise. They should especially furnish one on how far they are satisfied with the results contained therein, and what measures are going to be taken to rectify the sources of dissatisfaction.

The directory brings to the fore two categories of persons liable for follow-up action: those who are not filing, and those who are doing so but not giving the correct figure for their income. Of these, the latter group clearly merits punitive action. Those in the former category, on the other hand, must be urged to start filing, particularly in the case of salaried persons who are paying taxes through deductions from their monthly income but failing to file their returns. Publication of the directory is a welcome exercise, but it now needs to be taken a step further.

Published in Dawn, April 13th, 2015

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