Published in TAX INDIA ON LINE ON AUGUST 02, 2013 TPC & TPA - Alternative system of tax collection for Developing Countries - Part II By Prof Bijon Sarma RESCHEDULING TIME FOR ANNUAL TAX PAYMENT AT present the annual income taxes of persons and organizations are collected on a fixed day of each tax year. This creates tremendous pressure and problems for the tax-payers and collectors for a few days. The proposal for rescheduling of time for annual tax payment has been prepared to solve this problem. The proposal involves - dividing the total number of the taxpayers into twelve groups and fixing one calendar month as the final payment month for each group. The calendar month will be determined by the first letter of the name of the person or organization. A sample list for such schedule has been shown in the following figure. SCHEDULED MONTHS OF TAX PAYMENT, ON THE BASIS OF NAME FIRST LETTER OF NAME MONTH FOR TAX PAYMENT FIRST LETTER OF NAME MONTH FOR TAX PAYMENT FIRST LETTER OF NAME MONTH FOR TAX PAYMENT A, B January I, J May P, Q, R September C, D February K, L June S October E, F March M July T, U, V November G, H April N, O August W, X, Y , Z December If TP Cheque and TP Account are introduced and annual tax payment time is rescheduled, qualitative changes would come in the tax payment and collection. It would lessen the job of the tax payers and collecting personnel and render their jobs easy, efficient and transparent. JOBS OF THE TAX-PAYERS : In the proposed system the tax payers (i.e. wage, price, fees, and rent earners) would have to do the following simple jobs : 01. (a) The wage earner would have to place the TP Cheque to the bank along with the deposit slip, mentioning his Taxpayers Identification Number (TIN). After payments he would collect the deposit slip and preserve for future use. (b) The price, fees, and rent earners would have to deposit the collected cash or cheques in their specified TP Accounts. 02. (a) On the month indicated by the first letter of one's name, the wage earner would have to prepare and submit a statement to the tax authorities mentioning details of the taxes paid through slips, along with a statement from his bank. (b) Similarly the price, fees, and rent earners would have to submit statements along with copies of deposit slips, bank statement and used cash memo books. ADVANTAGES OF THE PROPOSED SYSTEM : Some of the advantages of the proposed system are : (i) The tax authority may get the tax right at the moment it is generated. (ii) The taxpayers can to do their job at ease because it mostly involves the preparation and submission of a statement by using the deposit slips and bank statements. (iii) The tax authorities can work efficiently because their workload on the last month of the financial year is reduced to 1/12 th . (iv) The government or tax authority need not take up expensive programs for increasing the tax net because in the proposed system all taxable fields are covered automatically. (v) There remains little scope for scam because all payments are done in black and white and all jobs, transparently. CONCLUSION: Till today, TP Cheque and TP Account exist only in the imagination of this author. However, it does not need much intelligence to understand that the introduction of TPC and TPA is very much possible and that, these are in fact inexpensive. The only thing needed is the government's decision and their execution. In the proposed system the scope of scam in fixing, paying and collecting income tax is almost nil, because all these are to be prepared, paid, monitored and checked by competent authorities at all phases. In case it is introduced, the tax collection authority may need less man-power, because major portions of their jobs will be performed by the employers, taxpayers and banks. Various countries of the world have chalked out their distinctively different programs for collection of taxes. The developed countries having skilled manpower and sophisticated equipments find the job easier and economic for obvious reasons. The same may be proved uneconomic in countries lacking in these facilities. Still worse may be the case with the countries having people with questionable integrity. And finally, the outcome may be still worst in case there takes place any failure of the sophisticated gadgets and equipments. In the above situation, there are ample reasons to believe that the introduction of (i) Two-party Payment Cheque (TPC), (ii) Two-party Payment Account (TPA) and (ii) Rescheduling of annual tax payment time will be able to solve most of the above problems at negligible cost. Reference: 01. Website of National Board of Revenue, Bangladesh. (Click This Link .) “INCOME TAX AT A GLANCE” : Tax Rate (Assessment Year- 2011-2012) : Other than Company. For individuals (other than female taxpayers, senior taxpayers of 65 years and above and retarded taxpayers), tax payable for the (i) First 1,80,000/- Nil, (ii) Next 3,00,000/- 10%, (iii) Next 4,00,000/- 15%, (iii) Next 3,00,000/- 20%, (iv) Rest Amount 25%. Minimum tax for any individual assessee is Tk. 2,000. (The author is M.Arch, Architecture Department, Ahsanullah University of Science & Technology, Dhaka, Bangladesh) Editor: The series stands concluded.