Smuggling of arms and ammunition: Commission suggests restoration of old FBR organisational structure

One-member Commission on 'smuggling of arms and ammunition' has strongly recommended restoration of old organisational structure of the Federal Board of Revenue (FBR) under which separate Members for Customs, Sales Tax, Federal Excise, Income Tax and Withholding Tax were independently dealing all the federal taxes.
Sources told Business Recorder here on Sunday that the former FBR Member Customs, Ramzan Bhatti has categorically declared in its fact-finding report that the reforms in the tax administration and new organisational structure of the FBR as a result of Tax Administration Reform Project failed to achieve the desired results, and resultantly there is low Tax-to-GDP ratio in the country.
While quoting the report, sources said that a massive effort was made with the financial and technical assistance to re-organise and re-structure the FBR and field formations during 2004 - 2010 under the title of Tax Administration Reforms Project (TARP). The project had failed to achieve its objectives and the money loaned had gone down the drain. The factual position is that the restructured FBR and field formations have failed to achieve the targeted goal of raising the tax-to-GDP ratio to 15%. Conversely, the tax-to-GDP ratio has declined over the period while the compliance cost ie administrative cost as well as taxpayers cost has increased.
Sources said that the stated objectives of broadening the tax base and providing the taxpayers a friendly environment have not been realised despite doubling the remunerations of tax functionaries and improvement of work environment. There is, therefore, a need to evolve a tax policy keeping in view the ground realities.
The Commission proposes review of existing tax policy on the following lines:
Firstly, the FBR which comprises of two functional Members ie One for Customs and other for all Domestic Taxes (Income Tax, Federal Excise and Sales Tax) and over a dozen supporting Members may be restructured with separate Members for Customs, Sales Tax, Federal Excise, Corporate Tax, Withholding Tax and rest of the Income Tax with a very few supporting Members, sources said.
Similarly, the field formations should be reorganised on functional basis to harness the full potential of each tax. It is a well established fact that a single Member or a Commissionerate cannot appropriately and comprehensively tackle with a number of tax regimes completely different from each other.
The experience shows that even the foreign investors/construction contractors etc are dealt with differently in each Commissionerate. The compounding problems are the refunds, issuance of exemption certificates and tax assessment of foreign companies which need to be centralised in the FBR on the pattern of a good experience of monitoring and issuing of sales tax refunds by the FBR. This will ensure a uniform system and procedure for taxpayers of each specified category and effectively plug the loopholes in revenue collection, sources quoted report of the commission.