Name Hassan Raza

Roll No: 19820920-002

Department Management sciences
Semester 3rd
Shift Morning
Submitted to Prof. Shoaib Islam
Course Title Business Taxation
Course Code MGT-218

GMGC Sialkot
Recommendation:

PROPOSED LEGAL TAX REFORMATION

Impactful Improvement always come with the combinations of short and long term reforms.
Before suggestion any solution to tax problems of Pakistan, It is necessary to understand the
outcomes of these reforms that can be get.

For any reformation, every newly initiation or insertion in taxation system, need legal umbrella.
Which can help in administrative functioning, implementations, prosecution in case of
wrongdoing, recovery of revenue and penalizing the accused?

On the other hand of law, it also provides the protection to the wrongly accused person and also
law can guarantee the remedy in case of loss.

Legal tax reforms somehow based on these four needs

• Administrative support

• Implementation procedure

• Prosecution material

• Penalty/ Remedy

These are some recommended proposal of legal solutions in tax reforms

. a) Administrative Reform
Administrative approach should be changed from present administrative structure as only a
regulator to also with addition of facilitator of taxpayer and do the need full things to bound
administration officers legally. Administrational structure play very vital role in the revenue
collection because this is the front line of all implementations.

Any corrupt officer easily can nullify the simple tax regulations with his self-ambition over
national interest. Good policy can be nonfunctional by bad officer but any bad policy could have
a chance to get result with honest and policy educated officer.

b) Taxpayers’ Bill of Rights

Federal Board of Revenue (FBR) behavior of suspicion and disbelief towards the taxpayers, are
increasing disbelieve in taxation system. The reason behind this disbelieve are different:

First reason, FBR official’s inconsideration behavior with corrupt practices shaped the
atmosphere of disbelief among the taxpayers and the State.
 Second reason, the newly elected governments didn’t take any measure to build that trust
relationship and failed to develop the elderly relation with taxpayers. The government on the
other hand also putting an effort to increase this distrust level by the useless projects without any
priorities behavior , unfortunately that is a waste of taxpayer money, that need to be protected by
the rule of laws.

This trust deficit can be reconciled by taking few steps which provide the sense of trust among
the taxpayers. State can easily create that kind of situation to build the relation with public.

The procedure related to the tax reform need rational approach of state for the nation progress.
Meanwhile, the Government may issue the “Bill of Rights” in connection with restoration of
taxpayer’s confidence.

The provisions of the Bill must:–

(a) Maintain and strengthen the rights of taxpayers

State should maintain and strengthen the rights of taxpayer in every legal situation of need.

(b) Guarantee equality of treatment

In administrative interaction and requirements the taxpayer should be treat equally and no any
special person cloud get the favors and other face discrimination.

(c) Privacy of declaration

Government should ensure the privacy of taxpayer’s confidential information about declarations
and that cannot be used for blackmailing.

(d) Right to assistance

State has fully assistance or facilitation center for the taxpayer guidance in time of assistance.

(e) Right of Appeal

The right to appeal already exists for taxpayer but it need to be simple in procedure and time
barded.

(f) Facilities for independent judicial Review

Taxpayer should have the right of independent judicial review of his judgment.

The idea of is this bill come from the US bill of rights. In United States and United Kingdom this
bill of right in tax matter is implemented and has very successful implication. But in Pakistan the
issue is with, approach of administration and public, towards the tax policies, they acted in a very
narrow-minded mentality.

In Pakistan, only the 1% of population files tax return and in this 1% mostly provide the wrong
data. Even then this is a matter of perception, Taxpayers needs these kind of rights to feel
importance and get educated with the future returns.

The Taxpayers negligible behavior only can be changed by the impression of respect, this sense
of respect or not being treated as thief before evidencing any concealment.

The current tax policies are based on protecting elite rights not for the protection of all taxpayers’
rights.

Income tax reforms are very much need of the time and any recommendation in income taxation
ordinance are welcomed and government adviser should consider while drafting that it must be
simple, certain, equity and transparency factor.

In Pakistan also the Income tax is the major source of tax collection and its need to be more
proficient.

The recommendation in this regards to promote the economic growth without any antigrowth
activity, is to attach taxation system with rewards and encouragements.