In Pakistan, the period from July to September every year is tax season when taxpayers fulfil their national obligations of voluntarily filing their annual income tax returns and statements of assets and liabilities. They declare their net annual income and wealth on a portal set up by the Federal Bureau of Revenue (FBR), which will be assessed by the department in the following assessment year. Once this obligation has been fulfilled, taxpayers are entitled to the fulfilment of their rights by the state. Taxpayers are, thus, the major stakeholders in the financial revenue collected by the national exchequer. They contribute to the state’s revenue generation process in the form of taxes, charges, cess (tax for the purpose of development in social sectors), duties and levies etc.
Taxpayers’ money is then spent on implementing development projects, social welfare, and basic services for citizens, such as education, health, security, law enforcement, defence and transportation systems, etc. An effective tax collection system contributes to the smooth functioning and development of the state.
As taxpayers, citizens are entitled to certain rights and privileges guaranteed through legislation. The state authorities must protect the following rights of the taxpayers: the right to be treated fairly, with respect and dignity during the handling of their tax matters; the right to be informed, assisted and heard about tax obligations; the right to be educated and facilitated in tax matters; the right to file an appeal against a tax assessment order; the right to pay no more than the due amount of tax; the right to claim due exemptions, concessions and rebates in the taxes; the right to fair trial and adoption of due process of law during any tax proceedings to determine the tax liability; the right to issue the due refund of taxes within a prescribed time limit; the right to consult and be represented by a legal/tax practitioner of their choice; the right to confidentiality, privacy, and certainty of taxpayer’s information; and the right to life, survival and development.
It is the state's responsibility to ensure that resident and non-resident taxpayers’ rights and obligations are exercised in true letter and spirit by the state authorities
Just as the taxpayers have rights, they also have certain obligations to act as responsible citizens and pay their taxes in a timely and diligent manner. The following are some obligations that must be fulfilled: the obligation to register as a taxpayer in accordance with the procedure laid down in the law and regularly update any changes in their taxpayer profile accordingly; the obligation to timely file the tax returns; the obligation to pay due taxes in full and on time; the obligation to maintain accounts, registers and other relevant documents in accordance with procedures described in the law; the obligation to provide accurate information and documents to tax authorities; the obligation to familiarise oneself with the basics of taxation laws and policies; the obligation to be honest and co-operative in his taxation matters; the obligation to report tax fraud, abuse and scam to the law enforcement agencies.
The aforementioned taxpayers’ rights and obligations are an integral part of the taxation system of any state to function effectively and ensure transparency. It is, therefore, the state's responsibility to ensure that resident and non-resident taxpayers’ rights and obligations are exercised in true letter and spirit by the state authorities.
Many states have developed the Taxpayers’ Charters or the Taxpayers’ Bills of Rights, which declare the basic rights and obligations of taxpayers and are publicly accessible. In Pakistan, the FBR’s Facilitation and Taxpayers Education (FATE) wing has published the Taxpayers’ Charter to document the obligations of the state’s tax collection officials and taxpayers in discharging their obligations. However, the charter is not properly followed in practice: both the state’s revenue authorities and taxpayers are negligent of their obligations. This situation is further aggravated by the lack of political stability and the will, as well as financial investment, to improve the taxation system. Consequently, we face inadequate tax enforcement, monetary loss to the national exchequer, declining economy and violation of taxpayers’ rights and obligations.
The FBR’s Taxpayers’ Charter is simply a facilitation guide for the proper implementation of taxation laws, but it is not an exclusive law to oversee and ensure taxpayer’s rights and obligations. Some states have enacted the Taxpayers’ Charters or Bills of Rights, either as part of their taxation laws or as exclusive legislation. However, that has not been the case in Pakistan. Therefore, it is recommended that the federal government enact an exclusive law entitled the ‘Taxpayers’ Rights and Obligations Protection Act’ to safeguard taxpayers from infringement of their rights. Any such proposed legislation should clearly declare the rights and obligations of taxpayers and prescribe awards for those who pay due or high amounts of taxes and penalties for the violators of tax obligations. This can improve a broken taxation system, broaden the active taxpayer database, raise the tax-to-GDP ratio, and prevent tax theft and malpractice of the officials. If implemented effectively, these measures will contribute towards advancing the country’s dilapidated economy.