For the last almost three decades, FBR has been particularly targeted as an institution through unnecessary and counterproductive experimentation. In the name of reforms, this important revenue generating machinery has been damaged with frequent strokes.
People at the helm of affairs have been making changes both in the law and administrative structure on the behest of those who were either ignorant of the working of FBR as an institution or were representing self-interest and powerful mafias.
In case of direct taxes, structure and legal framework of Income Tax Ordinance 1979 was replaced by promulgating Income Tax Ordinance 2001 without any demand by business community or tax advisors and without any feedback or even knowledge of tax officials.
Tax payers were only demanding to enlarge the scope self-assessment scheme which could easily be done through amendment. But instead a legal document prepared by a foreign expert recommended by World Bank. That new law in the shape of Income Tax Ordinance 2001, which was thrust upon the tax officials as well as tax payers, having little connection with ground realities.
Administrative structure was shaken with huge loss of funds, wastage of time and loss of old record having details of revenues. Tax officials were made to sit in cabins and rooms like bank offices, ignoring the fact the tax law has semi-judicial status. Jurisdictions were torn apart in disregard to functions of tax officials and taxpayers on the ground.
Commissioner’s requirements of position have been reduced to almost a supervisor although he should be real boss of zonal officers with full power of postings, transfers and fund allocation to subordinate offices according to their needs, as was the case prior to promulgation of 2001 ordinance.
The new system made the functions incoherent, disjointed and unfocussed lacking proper ownership of responsibility – a very bad outcome of excessive centralization. Together with such anomalies, a continuous tape is being played regarding corruption and inefficiency in FBR.
Corruption is no doubt there but it is not the only institution having corrupt practices and definitely not to the extent to which some other Government institutions are blamed. The experiments thrusts upon FBR also include legal provisions which provide that Chartered Accountants would also act as tax assessment officers, that is, the advisors and auditors of tax payers will earn and extract revenue from their own class of clients!!! Strange provisions indeed.
When you don’t trust and empower your own workforce, there will be no institution building tradition. There are powerful people in power corridors who would not like an independent tax system – this is what I have seen in my life long service as tax official.
After all, costly properties, the costly vehicles and other apparent sources of tax evasion worth crores of rupees are spread all around in the country and we have definite evidence regarding their ownership, but FBR is legally compelled to tax small land holders, shops, below average businesses, and salaried persons while mostly relying on imposition of withholding tax on everything used mostly by common man.
Withholding tax is not tax on income but it is a tax on consumption. What needs to be done is that as an institution FBR must be independent authority with tenure posts of Chairman and Members of FBR for a period of four or five years and legal provisions should protect them from any outside influence including postings, transfers and expenditure of funds.
These officers, particularly, Chairman, must be a lifelong career tax officer and no outsider should be nominated for such posts. They would then be wholly responsible for any act of omission & commission of their subordinates exercising legally protected independent powers. This suggestion has been advocated time and again by the experts but no government was ready to abdicate its authority of having interference and influence on FBR.
This is the only long term solution for a stable and efficient FBR as an institution, and unnecessary, indeed naïve, experimentation must be avoided. The present Caretaker Government must not become a party to shatter whatever is left of FBR as an institution, by dividing it in two parallel and unconnected parts, which would cause further erosion of an institution which serves as the backbone of economy of the country.
Let us hope the better sense will prevail.
Also Read: Salaried working class of Pakistan pay 243pc more tax than wealthy exporters
