ISLAMABAD -- The Federal Board of Revenue (FBR) has proposed massive increase in the
penalty rates as part of the move to broaden tax compliance in the country.
One of the major reasons is the imposition of high official
penalty rates. The problem is, once the taxpayer got behind on tax payments, it quickly accumulates to large penalties and interest charges.
Finance Minister Lim Guan Eng yesterday announced the Special Voluntary Disclosure Programme to be offered from November 3, 2018 until June 30, 2019 where taxpayers will receive reduced
penalty rates.
The low
penalty rates, particularly for repatriated assets, increase the likelihood of the scheme's success.
Cutting
penalty rates has contributed to a reduction in consumer spending while failing to create any extra jobs or give workers more hours, according to recent research.
Currently, different
penalty rates are imposed depending on where a motorist is apprehended and which enforcer issued the citation tickets.
Bank of America Corp (NYSE: BAC) has announced a change in the
penalty rates that it would charges customers who miss a repayment.
Such individuals must use the normal procedures and may face much higher
penalty rates: 30 per cent or above is not uncommon under the new penalty rules."
That would change under the PBGC proposal, which sets various
penalty rates based on the number of plan participants.
1637, like similar provisions contained in other pending legislation, would make significant use of increased accuracy-related
penalty rates (as noted above, as high as 40 percent), impose stringent standards for avoidance of penalties and waiver of them (which in many cases essentially impose a form of strict liability that affords no discretion in their application), and impose other punitive provisions on taxpayers that would deny interest deductions on underpayments, extend statutes of limitations, levy fines, and require disclosures in filings with the Securities and Exchange Commission.
Unfortunately, all this action has taken place in the absence of any solid knowledge about the responsiveness of tax compliance to such policy tools as audit rates,
penalty rates, and tax rate schedule [Graetz and Wilde, 1985].