EDITORIAL: In a fresh indicator of the Federal Board of Revenue’s (FBR’s) utter inability to carry out its basic job of meeting collection targets, the Islamabad High Court (IHC) has put a stop to the latest inexplicable measure that the tax authority had attempted to carry out in a bid to coerce non-filers of tax returns for 2023.
While hearing a petition on May 14 that challenged the FBR’s order directing the telecom sector to block SIM cards of more than 500,000 non-filers, the IHC restrained the tax body from doing so, and has sought a response from it on the matter at the next hearing of the case.
Even a brief study of the FBR’s history tells us that the tax body excels at devising convoluted methods and baffling strategies, which coupled with its bureaucratic red tape and incompetence, has led to the current dire state of tax collection, a confounding over Rs2 trillion, according to FBR, stuck in tax litigation, a narrow tax base, as well as a paucity of effective endeavours that could lead to its broadening and that could resolve the glacial pace of tax litigation.
The FBR’s supremely inefficient handling of tax litigation has been highlighted in some detail over the past week by the Attorney General for Pakistan in two letters written to the bureau’s chairman that have decried the poor performance of the tax body’s legal teams in courts.
The letters point out that when revenue matters are decided against the FBR in the appellate tribunals, the bureau’s lawyers do not promptly file review applications against the decisions in courts, often waiting until the last possible minute to do so, and even when the reviews are filed, the lawyers’ slackness ensures that stay orders against verdicts by tribunals aren’t obtained for months.
Moreover, FBR representatives routinely fail to appear in courts despite being served with notices. This, coupled with the utter lack of coordination among the bureau’s various field formations and departments, has led to “complete chaos”, causing repeated adjournments and significant loss to the national exchequer.
Coming to the saga of the FBR ordering the blocking of SIM cards of non-filers, this is another prime example of the bureau attempting to hide its inefficiency by creating problems for other sectors of the economy.
One wonders what the authors of this bewildering measure were thinking when devising it; did they really think it prudent to take an action that effectively penalises telecom companies, which incidentally have contributed significantly to the economy in the form of foreign direct investment (FDI) and revenue generation? Why should they be punished for the ineptitude of our tax bureaucracy? As had been rightly pointed out during the hearing at the IHC, this action violates the basic right of freedom of business enshrined in the Constitution’s Article 18.
The FBR, in effect, is not only failing to do its job in meeting collection targets, enhancing the tax base and efficiently dealing with tax litigation, it is, in fact, making matters worse by attempting measures that discourage FDI inflows, and worsen the business environment in the country.
At the very least, the bureau could fix the sluggish pace of tax litigation as that is something that is largely in its hands. What is stopping its legal teams from being proactive and swift about following up on cases in the higher courts?
How complicated is it to improve coordination among its various field formations and departments? Why can’t the government increase the number of benches hearing revenue matters in the higher courts? It is high time our tax bureaucracy realises that if it is sincere about reforming the tax system, it cannot avoid the hard work required for that endeavour, and that its knack of coming up with myopic and time serving measures that besides violating guaranteed freedom under the constitution also militate against the much-needed foreign direct investment in the country.
Copyright Business Recorder, 2024
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