The World Bank (WB) has said that it has no objection if the government and tax authorities mutually agree on autonomous status to Central Board of Revenue (CBR).
Abid Hasan, Acting Country Director, WB, was responding to a question on CBR autonomy during a briefing on the tax administration reform plan here at the World Bank office on Tuesday.
He said that if the government and CBR mutually agree on autonomy modules, the World Bank would have no objection.
The tax authorities were of the view that CBR would go for maximum autonomy, while remaining part of government. The CBR will consult all stakeholders for achieving this objective.
M S Lal, CBR Member, Tax Policy and Reforms, said that the basic purpose of autonomy to the CBR is to protect the organisation from outside political influence and extend attractive compensation and pay packages to its employees as the autonomous CBR could operate more effectively as part of government organization.
Mudassir Khan, Team Leader and Senior Financial Sector Specialist, WB, said that World Bank (WB) has identified four risk areas, which could hamper implementation of the tax administration reforms plan.
THESE ARE: lack of continuous support from government during implementation; resistance to change; implementation risk; and there is a risk that the reform plan may not yield the desired results.
He said that if there is delay in the implementation, "we could slow down momentum" of the ongoing reform process.
CBR Chairman Abdullah Yousuf and his team of tax managers were also present on the occasion to apprise about the progress made so far.
Lal made a detailed presentation on the reforms, with particular reference to autonomy to the CBR needed by the CBR to effectively implement the reforms.
Mudassir said that out of total program cost of $145,634,772, the credit amount includes $122,433,270 while government's share would be $23,261,503.
The amount would be spent on technical assistance, ICT (customised software), ICT (server, PC, SW general, equipment), goods (vehicles), infrastructure development, training and program management.
He said that the main economic benefits of the tax administration reforms include increase in revenue as a result of broadening of tax-base, improvement in custom procedure aim to reduce the average clearance time reducing cost of doing business, improvement in voluntary tax compliance rate implying early revenue generation and reduction in taxpayer costs associated with tax compliance.
Outlining major project components, WB Team Leader pointed out that the CBR is improving revenue operations on direct taxes, customs, sales tax and central excise sides. On income tax side, tracker system is being used for enforcement purposes along with sales tax which will have all the IT functions in it.
Another project component is strengthening revenue service through audit, collection and enforcement, appeals and dispute resolution, national intelligence and risk management and checking tax frauds.
The CBR is making efforts to create a tax-compliant culture through taxpayer education and facilitation, communication program, internet facilities and call centres.
Mudassir said that the key performance indicators are tax to GDP ratio, average time taken by new business to register with tax authorities and organisational efficiency and effectiveness. Other indicators include the number of registered active taxpayers, tax revenue paid on time/total tax revenues assessed and stakeholders' opinion on quality of service provided.
Regarding integrity of the tax officials, the key performance indicator would be public perception of revenue administration integrity as measured by periodic surveys and average number of days to complete administrative appeals process.
When WB officials asked to give the figures of total number of persons jailed for committing tax fraud during past 50 years, CBR officials said that the number of such persons was meagre.
However, the number of such persons was more on the customs and excise side as compared to income tax. It is difficult to prove these evaders as criminals in the court, they added.
During question-answer session, one of the participants from donor agencies pointed out that tax to GDP ratio per year is very low as compared to other countries.
While briefing the WB/IMF, CBR Chairman said that the Board would consult with those countries where tax reforms have been carried out smoothly. The success of reforms in model countries would help CBR to implement reform process.
He said that once the investor-friendly environment is created, it would accelerate economic growth.
Looking at the global competitive environment, the government has also moved to meet the challenges through reforms in CBR. The government has introduced reform process for achieving high level growth.
He said: "We should have the tax machinery capable of delivering results. The CBR is trying to develop a workable model in accordance with our need. We could seek maximum autonomy for the CBR."
The CBR is simplifying tax collection procedure to broaden its base.
Yousuf said that tax authorities see no problem why the efforts should not succeed. Simplification and transparency in tax collection would yield the desired results.
The CBR has to strengthen the systems to introduce reforms, cutting down various unnecessary paperwork procedures.
For the training and taxpayer education and facilitation, the CBR for the first time has established a media cell to educate the taxpayers. The tax officials go out and meet private sector stakeholders to educate them on various taxation measures removing apprehensions of the taxpayers.
In his opening remarks, Abid Hasan briefed the participants about the continued interest of World Bank in various projects being undertaken through the assistance of the Bank and said that the tax administration reform project in Pakistan is fairly at advanced stage and has shown remarkable improvement in the tax system.
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