Commissioners fail to chalk out tax collection strategy: transfers, postings main focus of moot

The 4th Chief Commissioner's Conference at the FBR Headquarters opened on Thursday was unable to chalk out a strategy for achieving the 2011-12 revenue target and broadening the tax-base as the issue of transfers and postings dominates the proceeding of the conference during the first session.
Federal Board of Revenue Member Inland Revenue (IR) Khawar Khurshid Butt expressed a serious concern over the withdrawal of transfers and postings power of tax officials in LTUs and RTOs from him, which he said will have serious implications on the efforts to achieve the assigned revenue collection targets.
FBR Chairman Salman Siddiq patiently heard the viewpoint of the FBR Member IR during the conference and decided to convene a special Board-in-Council meeting to discuss the matter. The FBR Chairman asked the FBR Member IR that the Board meeting could be convened whenever FBR Member IR wanted to resolve the issue. The FBR Chairman also assured the FBR Member IR that the issue could be resolved at the competent forum of the Board-in-Council in the interest of the organisation.
Sources said that the issue of the powers of transfers and postings by the FBR Member IR came to the light during the first session of the conference soon after the inaugural speech of the FBR Chairman. FBR Member IR Khawar Khurshid Butt categorically informed the conference that his powers stand withdrawn since April 2, 2011. "My powers have been taken away and neither I can transfer any person nor post anyone in the field formations. If the FBR give us revenue collection targets, the Board should also empower the concerned authority for completion of the job. Nobody in the field formations is ready to implement his orders," FBR Member IR said.
The first session focused on the issue raised by the FBR Member IR. There was no representation of FBR Member Administration to whom powers of transfers and postings of tax officials in the LTUs and RTOs were given since April 2, 2011. Khawar Khurshid Butt further informed the Chief Commissioners that the forum of the FBR Board-in-Council has been used as per desire of the tax authorities. The last orders of April 2, 2001 on the withdrawal of FBR Member IR's powers of transfers and postings in the field formations was also not taken at the level of the Board-in-Council.
The orders were issued without the approval of the Board-in-Council. Only those issues have been discussed at the forum of the Board-in-Council on which the FBR wanted to take decisions. Tax authorities have issued the orders on April 2, 2011 to take away powers of transfers and postings from the FBR Member IR and the same authority should restore the powers of the FBR Member IR.
"FBR Chairman has passed the orders and the same authority should withdraw such powers without taking the matter to the Board-in-Council. I have also written to the FBR Chairman in this regard, but no action has been taken on my report submitted to the tax authorities. Instead of strengthening the IR Service, the FBR Member IR has been made helpless without any powers, which is unfortunate", Butt kept on saying.
Responding to the observations of the Member IR, FBR Chairman Salman Siddiqui observed that the issue could be discussed in the next Board-in-Council meeting whenever the FBR Member desires to do so. FBR Chairman has shown total patience during the Chief Commissioner's Conference and shown his willingness to resolve the issue in the light of remarks made by the FBR Member IR on transfers and postings.
FBR Member IR Khawar Khurshid Butt further shocked the Chief Commissioners when he pointed out that a sales tax official has done a conspiracy against the Inland Revenue Service by proposing that the position of the FBR Member IR be divided among two different Member ie FBR Member Sales Tax and FBR Member Income Tax, which is totally against the reforms in the tax administration. It was argued in the report of the said sales tax official that the corruption has been increased following creation of the post of the FBR Member IR. Contrary to this, the FBR has shown remarkable performance in achieving revenue targets, recovery of arrears and broadening the tax-base. It is conspiracy against the Inland Revenue Service and question be asked to the concerned sales tax official, who has submitted such kind of forged report against the Inland Revenue Service.
Sources said that the FBR Chairman informed the conference that a mistake of gross or net revenue was committed in the past. It is matter of past as the figure reconciliation has been completed and net revenue has been finalised. But now we have to look forward for achieving the assigned revenue estimates. He further directed the field formations to submit the revenue potential of each LTU and RTO for fixation of revenue estimates for 2011-2012 on monthly basis. The field formations should focus on revenue estimates and it should not be called as revenue targets. These are revenue estimates like expenditures estimates. An effective mechanism be developed for reporting of net figures by the field formations, Salman Siddiqui added.
Tax authorities also agreed to a proposal that a Grade-22 post of the IRS be created for which the FBR will take up the matter with the Establishment Division. Sources added that a presentation was also made by former Chairman FBR Abdullah Yusuf on the improvement of IT systems and audit/refunds. Meanwhile, Chief Commissioner's 4th Conference here on Thursday decided that in the current financial year 2011-12 Federal Board of Revenue to focus on enforcement, audit and identifying new taxpayers to ensure realisation of Rs 1.952 trillion.
The Chief Commissioner shall prepare their revenue estimates based on rate of inflation, rate of economic growth and their efforts in enforcement, demand creation, audits, and bringing new taxpayers in the net. Official sources informed that Chief Commissioners have failed to meet the deadline of July 31 given for completion of Post Refund Audit of the key taxpayers under Expeditious Refund System. Owing to this FBR is likely to face difficulty in managing refunds.
Chief Commissioner's Conference was held under the Chairmanship of Secretary Revenue Division on Thursday. It was decided in the meeting that the current financial year would focus on enforcement, audit and bringing new taxpayer in the Tax Net. In this context important decisions were taken, Revenue estimation to be an interactive exercise involving the Chief Commissioners and the FBR beginning with the current financial year. The Chief Commissioner shall prepare their revenue estimates based on rate of inflation, rate of economic growth and their efforts in enforcement, demand creation, audits, and bringing new taxpayers in the net. These estimates shall be reviewed in the FBR headquarters and revenue estimates for the current financial year shall be finalised thereafter.
Some key decisions were taken in the conference. It was decided that tax collection reporting mechanisms to be strengthened at Head Quarter level so as to avoid the situation faced at the end of the fiscal year 2010-11. Maximum efforts would be directed towards collection of arrears and out of over Rs 100 billion arrears in all taxes, maximum recovery would be ensured.
The collection of withholding tax by withholding agents would be monitored and reported on a monthly basis so as to avoid the non-reporting or non-depositing of tax withheld by the withholding agents. All LTUs and RTOs to ensure broadening of tax base by bringing 700,000 new taxpayers in the tax net and efforts would be accelerated and progress to be reviewed every month. Technology shall be upgraded for cross matching of invoices to eliminate illegal inputs and illegal refunds in the Sales Tax system. It was clarified that under the reformed structure of FBR, no separate post of Member Sales Tax was under consideration.
Long due promotions in Inland Revenue Service (IRS) and Pakistan Customs Service (PCS) would be pursued with the Establishment Division and early convening of the Central Selection Board would be requested. The delegation of powers of posting and transfers in FBR would be reviewed in a special meeting of Board-in-Council. Recommendations would be made to the Government to reform the cadre structure of IRS and PCS, so that promotion pyramid is balanced and positions are available at the highest grade (BS-22) to incentives the two services.
The decisions of the last Chief Commissioners meeting were reviewed by Member (IR). A committee was constituted to initiate work force rationalisation and resolve jurisdiction issues of LTUs-RTOs. This committee shall comprise Member (IR), DG (HR), Nadeem Dar and Iqbal, Chief Commissioner. All Chief Commissioners were directed to prepare themselves soundly for attending the audit paras and attending to PAC observations with respect and competence. Post refund audit for improvement of ERS would be initiated in FBR. Training in post-refund audit shall also be strengthened. Data warehouse shall be developed in FBR for improving enforcement and audit on a scientific basis.