ISLAMABAD (December 01 2003): The Central Board of Revenue (CBR) is focusing on a methodology to encourage voluntary compliance by taxpayers, which will help in increasing revenue collection, broadening the tax base.
Official sources told Business Recorder here on Sunday that taxpayers need to exhibit general consent to pay taxes, whereas tax administrators need to improve the efficiency and effectiveness of taxpayer services.
Responding to both of these 'needs', the CBR reform plan places considerable emphasis on the importance of effective taxpayer education and facilitation strategies.
The new approach will promote the concept of customer-oriented services by promoting relationship between taxpayers and tax collectors. It also aims at lowering taxpayers' compliance costs.
The taxpayer's voluntary compliance could be encouraged by applying two different approaches:
Firstly, through compliance, which envisages that the tax burden is predictable; tax burden is calculable and with penalties; there are minimal intrusions by tax officials; there is no need for “negotiated” tax liability; there is no fear of retribution and there is better control and knowledge of financial status of the business.
Secondly, the repercussions of non-compliance would be a fear of being caught; more intrusions/investigation by tax officials and assessments for undeclared tax with additional costs in the form of interest, penalties and shame.