FBR’s Tax Credit Formula is Absurd & Unfair: Fawad Chaudhry

Federal Minister for Science and Technology, Fawad Chaudhry, has raised objections on the Federal Board of Revenue’s (FBR) tax credit formula and termed it as absurd.

In a Twitter post, the Minister wrote:

FBR’s formula [tax credit] is absurd. Tax credit should go to the districts where factories are established. Factories in Jhelum contribute billions to the national exchequer but tax credit goes to Islamabad/Karachi because of the head offices located there.

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He added that we suffer environmental and infrastructure hazards but tax credit goes elsewhere.

For the unversed, a tax credit is an amount of money that taxpayers can subtract from the income taxes they owe to the government.

A tax credit is normally offered to promote a specific behavior. For instance, a government may grant a tax credit to the auto industry to encourage it to replace gasoline-powered vehicles with EVs.

Recently, the FBR issued the Tax Directory 2018, containing detailed information of all taxpayers during FY 2017-2018.

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A provincial breakdown shows that Sindh contributed 44.91% of the total taxes and was the highest tax-paying province in 2018.

Punjab’s share in the total taxes for 2018 was 34.99% followed by Islamabad Capital Territory (ICT) with 14.77%.

Meanwhile, Khyber Pakhtunkhwa (KP) contributed with 3.54% of the total taxes in 2018, Balochistan with 1.67%, and Gilgit Baltistan with 0.12%.