The military regime has really done one good thing to the country's revenue system. In 2000, it appointed a Federal Tax Ombudsman to look into the grievances of the taxpayers. These grievances were too many and pending since 1980s. Like thousands of litigants still awaiting hearing by the Supreme Court, the taxpayers, too, were a hapless lot, at the mercy of arrogant and, by and large, corrupt tax collectors.
During his four years term, the Federal Tax Ombudsman, Justice Saleem Akhtar was able to clear a considerable part of the mess, as decisions came within months, and corrected the authoritarian mindset to a significant extent. The tax collectors now realise that an oversight authority can put them on notice for any irregularity.
With the disposal of over 5565 complaints, out of 5866 filed till September 15, FTO stands out as a strong symbol of accountability of the errant tax collectors. Their indiscretions, waywardness and harassment of taxpayers have been checked considerably.
As Justice Saleem Akhtar was about to complete his four years' tenure, Business Recorder interviewed him on his role. No one has been named for the job so far. The window for justice and equity set up by the military regime should not remain closed for long. Prime Minister Shaukat Aziz is all for continuity of policies, for good governance ie accountability, transparency and fair play. That is why, Ombudsman's office should be filled as early as possible. Further, it may be pertinent to point out to the Prime Minister that, when he was finance minister, he had pledged to have an ombudsman for banking, and even for insurance. The promise made some two years back is yet to be made good.
The appointment of Azhar Hameed as Banking Ombudsman has been notified but the office is not yet functional.
In his interview, Justice Akhtar emphasised that he worked for creating trust between the taxpayer and the collectors. He said that he was confident that if mistrust were replaced by confidence and mutual understanding, a culture of voluntary payment of taxes would come into play and eventually enhance the government's revenues. Many people had told him that they did not declare their true income for fear of harassment and injudicious decisions.
The following are the questions put to him and his answers.
QUESTION: How do you look at your service as FTO in the context of your long judicial career. Yours was a pioneering role as a Judge in a new capacity. Are you satisfied that you have done the job well?
FTO: I had the background of the Bar and Bench. With this experience, I accepted the post of FTO as a challenge. The office was created for the first time and was intended to grant relief to taxpayers by an independent oversight organisation.
The mindset of tax administrators was marked by arbitrary actions and a lack of transparency and accountability that created mistrust among the stakeholders. Reports of various tax commissions and task forces appointed by the government speak volumes about the problem. The appointment of a Tax Ombudsman was a common demand.
I took it as a challenge and made all endeavours to create trust and confidence to bridge the gap between the tax-payers and tax collectors. And I tried to infuse transparency and accountability and took decisions with independence and according to the norms of justice. My effort was also to create an atmosphere of respect for each other.
The establishment of the office was a stupendous task. The office in Islamabad and regional offices in Lahore and Karachi were manned by competent and honest officers and thus, by the grace of God, we performed our duty well.
Q: You have decided more than 4,000 complaints during your tenure as FTO. Do you find that the number of complaints is on the increase or the taxpayers are more cognisant of your office as an instrument of justice and that the tax collectors are more responsive to the needs and problems of taxpayers?
FTO: By today 5,866 cases were filed, of which 5,565 were disposed of. In disposing of complaints the advisor, directors and staff members performed their duties with a missionary zeal and in all honesty for which I am proud of them.
When the office was established, the people were not aware of their rights or of the forum for the redressal of their grievances. My first task was to create awareness for which I addressed various chambers, bar associations and trade bodies, and organised press talks etc. Here, I must acknowledge the role played by the press in creating awareness about the availability of a new forum for redress of grievances.
I would particularly mention Business Recorder as a leader among them. It may be of interest that many people told me that they maintained a record of BR containing decisions of FTO. I am grateful to it for promoting the cause of justice.
As awareness increased, the number of cases, too, went up. In 2000, 72 cases were received. Their number increased in the following years. On an average, 1600 to 1800 complaints were received in a year. This year there seems to be a decrease in the number of complaints, the primary reason being that in the present system of assessment human contact is limited.
Another reason seems to be that the tax administrators are also becoming careful that they would be facing an independent oversight institution of FTO. Moreover, a tax culture is being developed, which reduces mistrust. The process of reform and change in the attitude of tax collectors under the Chairman of the Board of Revenue is bound to improve relations between the two.
Q: In regard to complaints, can you identify their nature and the degree of incidence?
FTO: The largest number of complaints has been about income tax, sales tax and customs. In income tax complaints, the main grievance is arbitrary action, harassment, corruption, delay of refunds, misbehaviour, loss of record, incompetence, lack of discipline, knowledge and integrity, poor level of training of officers, disregard of judgements of superior courts and even the orders of the superior departments, obstinacy and false sense of pride and arrogance.
I was amazed to note that principles of natural justice were being violated by the officers of tax department in the face of court judgements. Similar were the complaints in the case of other taxes as well.
Q: CBR generally regards FTO more as an adversary, obstructing tax collection, than as a facilitator for observance of rules and thereby working as an agent for smooth functioning of the CBR and its reform agenda. Your comments!
FTO: It pains me to hear that. There is no question of being an adversary. FTO only oversees and pinpoints any lacunas and grants relief. It is well known that a department, which is accustomed to an overbearing behaviour without any check, would not certainly view an outsider with approval. In fact, I have tried to focus on points of maladministration and irritants/irregularities to seek reform and solution.
In fact, the entire tax culture suffers from lack of vision and transparency, mistrust and doubts. There was a loss of confidence--rather crisis of confidence. Unless these habits and attitudes are reformed, the department cannot be converted into a friendly organisation. I have been stressing the need for creating confidence and trust, which is bound to develop voluntary compliance and help increase revenues. There are a large number of people who do not declare their income for fear of harassment and injudicious decisions. Once these fears are removed and trust and confidence is created, a large number of people would voluntarily pay taxes, which would result in an increase of revenues.
Q: What has been the FTO's role in improving CBR's functioning, how and where? Can you briefly mention some instances.
FTO: When some maladministration is pinpointed, I also suggest and recommend some systemic reforms to improve the working of CBR. When professional and judicious view is taken, corruption would decrease and CBR's functioning would improve. A bad decision is not good governance, and thus maladministration occurs.
Under section 65 of the repealed IT Ordinance, assessment could be opened after approval of the IAC. First, a show-cause notice was issued with the consent of the IAC and after prolonged proceedings a proper notice was issued. This practice was illegal and caused harassment and corruption. After the FTO's notice, this practice was completely abolished.
In another instance, cases u/s 81 of the Customs Act provisional assessment was made at higher value, which frustrated the very objective of this section which envisaged provisional assessment on declared value and security for the balance amount was to be provided by the importer. Within one year, the provisional assessment became final. This practice allowed the department to misuse the provision. Since it was wrong and an instrument of sheer harassment, this practice was curbed.
Similarly, in ST cases, raids were conducted and demands were made against those who had paid ST to registered persons, and even computers were taken away. Relief was granted in such cases.
In the case of selection of returns through ballot, the procedure was held void and illegal and it was reformed.
Q: Has the Advisory Council come up with concrete suggestions for improvement of the system, and what was the response of the authorities?
FTO: The Advisory Council has done well and made recommendations by enumerating irritants to taxpayers and ways for their removal. The Council even proposed a taxpayer's 'bill of rights', and suggestions for establishment of an independent 'Revenue Judicial Service'. The suggestions have gone to the government. Some of these are under consideration, but nothing is known about the rest. One ought to be grateful to the Council members for sparing their time and energy voluntarily. Incidentally, as Finance Minister, Shaukat Aziz in his budget speech had referred to such a proposal for setting up an independent judicial tax service.
Q: Has FTO's secretariat not been constrained in regard to finances, manpower, accommodation and autonomy and more importantly, in taking up investigations on its own? How have you accomplished this aspect of your mandate?
FTO: There has been no constraint, financial or of manpower. The FTO was free to appoint the staff. There are some officers who came from different departments and were absorbed here. However, there has been acute shortage of accommodation. The FTO secretariat enjoyed full autonomy and independence in making decisions. However, it appeared that there was an attempt to administratively circumvent its independence.
Also, there seems to be some unease in relations with the law department. I judge the performance of the Law Ministry from the opinions it has rendered to the President in regard to the representations filed by CBR. I am amazed that the principles laid down by the binding rulings of the Supreme Court were not followed which, in my opinion, resulted in injustice.
Q: What would be your advice to your successor?
FTO: The office has achieved a reputation of its own during the last three or four years. Policy of independence, honesty and transparency and accountability should be followed and justice should be dispensed without fear or favour.