VAT scam

EDITORIAL

Value Added Tax (VAT) fraud to the tune of Rs. 6.59 billion plainly goes to show how lax the tax administration has been till date. Of course, this revelation has come about after a thorough investigation by the Ministry of Finance. That 518 firms had been involved in the scam is a grim reminder that all is not well as far as the body that looks into the tax affairs of the country is concerned. A question that emerges in the mind of a layperson is how the traders, contractors and firms could have swindled the tax administration of such a huge amount—all through the presentation of fake VAT bills. In fact, the tax officials ought to have been aware of the various means used to cheat the government. To tackle it, the Finance Ministry should have had proper policies. rules and regulations in place so that the evaders were arrested early on before they could do much damage. What is of greater concern is that it has been found that the VAT refunds were made even to those firms that had not conducted any business, which is a direct pointer to the fact that the taxpayers’ money had been plundered. All this took place under the guise of fake VAT bills. And, the perplexing aspect is that the tax officials did not find the ploy till very late, or they also were in some way involved in the defrauding scheme.

Though it is claimed that Rs. 1.3 billion of the total fraud revealed so far has been collected, the time it will take to do the rest is bound to be long considering the long process which can go up to the Supreme Court stage.

The big fraud has resulted from the firms and traders under-invoicing, avoiding VAT and producing fake VAT bills by

creating fictitious

transactions. The tax administration of the country and the tax officials should have been more vigilant so that the fraud to that extent would not have taken place. In fact, this particular investigation of the VAT scam has exposed the weakness of the tax administration as well as

the lack of sturdy work performance from the officials concerned. This has only resulted in state

coffers not filling up as targetted, and the taxpayers not seeing the services and infrastructures being added up as they should be. This is outright illegal but it has taken place and the tax policy ought to be updated to keep up with the pace of those who want to dupe the state outright.

Now, not even three months remain for the fiscal year 2011-2012 to end. This is the time to find out ways and means so that the VAT fraud can be eliminated. It calls for capability enhancement of the tax regulatory body and also enhancing the skills of the tax officials. The integrity and sincerity of those in the tax administration ought to be increased through appropriate incentives. It is quite encouraging that the Finance Ministry is all set to reform the existing VAT registration system to make it more reliable. The government is also going to bring the reform policy including VAT laws in the budget for 2012-2013. This comes as the assurance of the government, which hopefully will be reflected in the budget for the next fiscal year. Eliminating VAT frauds is essential to protect the interest of the taxpayers also.

Striking terror

Thunderbolts have been taking dozens of lives throughout the country. What is alarming is that there is not much we can do about them in the

present circumstances, and all of us are vulnerable to lightning. Going by news reports, the number of lightning victims is being reported with disturbing frequency. No day passes by without deaths from lightning in one place or the other. If there are ways

to save oneself from lightning then the authorities should disseminate the measures that could be

taken to reduce the risk to life from them. Since lightening can strike anywhere without notice, there is all the more reason to know about the precautions that could be taken.

For instance, there are several precautions to be taken during thunderstorms. It is advised to stay indoors or inside cars when lightning strike. Similarly, it is dangerous to stand under trees when they hit. In any case, facilities should be available to treat the victims in the immediate vicinity. The threat posed by lightning should be taken up seriously as casualties from them are very high.