Member Inland Revenue of the Federal Board of Revenue (FBR), Khawar Khurshid Butt, while addressing a gathering of tax officials, focused attention on what he termed the "dire" need for experienced and seasoned tax officials to be posted at the FBR House.
The objective of such an exercise, Butt argued, was to ensure that the headquarter of the tax collecting arm of government has the necessary expertise to draft policies and, more importantly, provide feedback on the effectivity of those policies by collecting and analysing that data. In case of success in implementation of any specific policy the strengthened FBR office would be able to replicate the success in its other departments and, in case of failure, it would be able to identify the reasons for the failure and suggest appropriate mitigating actions.
The issue is not one of lack of research and analytical expertise in the FBR but its lack at the FBR headquarters. The disturbing fact is that those individuals at FBR whose higher education has been financed by the government in foreign universities, return to this country and seek field positions instead of serving at headquarters. The reason for this preference may be the higher prestige associated with field positions as many use their influence to get field postings, or in other words, merit and suitability has not been used to make appropriate postings/transfers or indeed monetary incentives or personal and political clouts may have been used to change to cramp the decisions of the FBR hierarchy.
The inconvertible fact remains that expertise in research and analysis simply does not exist at FBR House. It is this fact which accounts for the rather unimaginative suggestions/recommendations made by the FBR whenever the Finance Ministry puts in a request to propose measures to raise total tax collections to achieve what has been a long standing demand, considered by now as almost a standard normal, request: how to raise our appallingly low tax to Gross Domestic Product ratio.
These recommendations have ranged from suggestions to raise the petroleum levy, a tax which is used to bridge the growing deficit rather than to develop the sector which would have guaranteed self-sufficiency in this sadly deficient sector, to proposing a return form requiring registered persons to record the CNIC/NTN numbers of all transactions with their unregistered buyers and sellers.
Thus a sugar mill owner would be compelled to provide the CNIC/NTN of a small farmer who may not have a CNIC or indeed an NTN. The Pakistan Sugar Mills Association has already raised the issue with FBR and requested an amendment to the return form to ensure its members can provide accurate and available information.
The performance of FBR has been a subject of considerable debate in this country for quite a while. In this context, it is necessary to point out that the FBR has benefited from a number of technical assistance initiatives from multilaterals (including the World Bank-supported Tax Administration Reform Programme) though little has been achieved in terms of strengthening its ability.
The release of revenue figures on June 30, the last day of the year, which were off by 38 billion rupees has led to a widening trust deficit with the IMF, with repercussions on the economy that transcend the role that any tax collecting arm of government should be allowed to play. There is an urgent need for the FBR to take appropriate measures to ensure that merit as well as incentives, monetary or non-monetary, be used to convince its highly educated and experienced staff to prefer to locate at the FBR House.
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