EDITORIAL: In a very welcome development, the Lahore High Court (LHC) has directed the Federal Board of Revenue (FBR) to issue notifications to all taxation officials to warn them of disciplinary proceedings for misuse of power in case of forced withdrawal of money from taxpayers’ bank accounts, which violates fundamental rights.
The court also ordered the Board to return amounts thus recovered, illegally, “within 15 days”.
Thankfully, the honourable court also made a point to remind everybody that such forced withdrawal from personal and business accounts, in the absence of due process, was not just an infringement of fundamental rights under Article 23 of the constitution but also detrimental for taxpayers’ businesses and business activity in general.
Most business owners who regularly run into the taxman are only too familiar with such coercive tactics. That’s exactly why they had heaved a sigh of relief when former FBR chairman Shabbar Zaidi had put a stop to this illegal and high-handed practice through issuance of an executive order that made it mandatory to seek clearance from the Chairman himself before attaching any citizen’s account and drawing funds from it. With Zaidi’s departure from FBR this high-handedness resurfaced. But now that it’s been brought before the honourable court, and a verdict has been delivered, FBR is simply forced to mend its ways. It’s been made very clear that tax officials must exhaust all legal and technical formalities before even thinking of rolling their sleeves up.
It is FBR’s singular failure to generate tax revenue and widen the tax net instead of milking only those that are within its net that is at the heart of the fiscal crisis that has now brought the country to the brink of sovereign default and left it hostage to international donors and the good will of our many creditors. Export earnings are hardly worth writing home about, whatever relief remittances brought once upon a time is fading away, and FDI (foreign direct investment) is so low that it isn’t even considered part of the current account anymore. So it’s natural that tax reforms capture the government’s most serious attention. It’s a shame that a country with one of the highest populations in the world has abysmal GDP size and growth potential and one of the lowest tax-to-GDP ratios around. And it’s an outright travesty that the best tax officials can do is throw their weight around and harass businesses that hold up income-and-employment generation trends.
It says a lot that it took a court decision to get FBR to mend its ways in something so straight-forward. And it gives a good idea about how deep the rot runs in what is, after all, one of the most important institutions within the government. Yet now that one irritant is out of the way, taxpayers’ lives should become a little easier and tax reforms must continue.
Copyright Business Recorder, 2024
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