FTO provides welcome relief

EDITORIAL: It is appreciated that the Federal Tax Ombudsman (FTO) was able to provide relief of Rs17.74 billion to taxpayers in 2023 compared to Rs 7 billion in 2022, especially since it received 24 percent more complaints against the maladministration of tax and customs authorities.

Briefing President Arif Alvi, the FTO explained that his office has improved provision of free-of-cost justice to complainants against high-handedness of tax officials within 60 days, and especially that the average time for disposal of complaints was reduced to just 44 days in the outgoing year, which is a remarkable achievement, given even the very recent past.

FTO is a “public relief-oriented organisation”, after all, and must provide tax relief to “low-paid employees, teachers, salaried classes, pensioners, and purchasers of vehicles”, according to its own statement. Now, the president was rightly pleased to know, it is also making efforts to increase its outreach and registration of cases by “opening new regional offices, establishing a helpline, and raising awareness through seminars and interactions with the business community”. Most importantly, FTO is also trying to create more awareness about its own role and services it can provide in tax matters through social media tools and applications.

These steps should have been taken a long time ago. But, much like most other aspects of the tax regime, everybody had just got used to the system always being behind the curve in the most important matters.

That is why FTO must be credited for its recent improvements. Going forward, the president was right to point out the need to further enhance and increase FTO’s outreach to taxpayers. He also called for more coordination between FTO and FBR (Federal Board of Revenue).

Now that increasing tax revenue is central to staying on the IMF lifeline, improving FBR’s performance will have to take priority. So far, the only reason meeting stiff IMF conditions has been so painful for the people is the desperate resort to indirect taxation, which always hurts the middle and lower classes more than the industrial/feudal elite that negotiate on their behalf with international lenders. And since talk of FBR reforms has never materalised, a very big majority of Pakistanis continue to shy away from paying their share of taxes.

Now, though, whichever government comes to power after the February elections will not be able to kick this can any further down the road. Tax reforms will definitely be part of upfront conditions for the post-SBA (Stand-By Arrangement) bailout programme, most likely another EFF (Extended Fund Facility), that everybody is already gearing up for. And it will, without a doubt, need the FTO to be at the top of its game, reaching out and facilitating taxpayers, throughout the reform process.

Its recent performance gives reason for hope. But for this optimism to spread wider into the taxation system will require similar commitment and dedication in other departments. There’s also the fact that there is no other choice. Either the country will expand its tax net and improve revenue, or become a basket case and eventually default.

Copyright Business Recorder, 2024