ISLAMABAD: The proposed Customs Oversight Board and Inland Revenue Oversight Board each would comprise 10 members under the restructuring plan of the Federal Board of Revenue (FBR).

The proposed Customs Oversight Board would comprise of Secretary Revenue Division; Secretary Finance Division; Secretary Commerce Division; an economist; International Trade and WTO expert; International Maritime/ Logistics expert; Security and Border Controls expert; E-Commerce Expert; representative of trade & industry and Director General Customs.

The proposed Inland Revenue Oversight Board would comprise Secretary Revenue Division; Secretary Finance Division; Secretary Commerce Division; International Tax Law Expert; Inland Revenue economist; income tax expert; sales tax and excise expert; technology expert; representative of trade & industry and Director General Inland Revenue.

MoF spells out FBR reforms agenda

Sources told Business Recorder that it is yet not clear how the FBR’s proposed restructuring plan would increase revenue collection by creating separate Director Generals of Customs and Inland Revenue. Whether the separation of tax policy from the FBR and bringing it within the domain of the Secretary Revenue Division would increase tax collection, they asked.

Major amendments in the Federal Board of Revenue (FBR) Act 2007 are required to implement the proposed restructuring of the Federal Board of Revenue (FBR).

When contacted, former FBR Chairman Shabbar Zaidi told Business Recorder that the government has to deal with the legal issues being confronted during the proposed FBR’s restructuring. He said the question arises whether the caretaker government would be able to deal with the legal issue of legislation in the FBR Act.

The changes in the administrative structure of the FBR would not be possible without changes in the FBR Act of 2007. The amendment in the said Act is not possible without approval of the Parliament or through an ordinance to be passed by the next government, Shabbar Zaidi added

It is learnt that the junior officers of regional tax offices, medium tax offices and corporate tax office of Karachi are thinking of observing a strike on Monday (today) against the FBR’s proposed restructuring plan.

Former chairman Reforms and Resource Mobilization Committee Ashfaq Tola strongly opposed constitution of a special Customs Board to manage the affairs of Pakistan Customs under the ongoing reform plan.

Tola said that the Policy Board is already established under the FBR Act of 2007. The Policy Board can provide guidance in matters relating to the vision, mission, and values of the Board, and to provide policy guidelines in framing fiscal policy and in achieving goals and targets. The Policy Board should be strengthened instead of creating separate Inland Revenue and Customs Boards. In the present setup, the Customs already had separated reporting lines and the Inland Revenue Service (IRS) had a separate setup except one Chairman for both groups.

Tola stated that the existing Policy Board have members including Minister for Finance, Chairman, Minister for Commerce, Member, Minister for Industries, Member, Minister for Textile Industries, Member, Minister for Privatization, Member, Chairman Senate Standing Committee on Finance and Revenues, Member, Chairman National Assembly Standing Committee on Finance and Revenue, Member, Chairman FBR, Member, one Member from the Senate to be nominated by Chairman, Senate Member; one Member from the National Assembly to be nominated by Speaker, National Assembly, Member and such other members as the Prime Minister shall nominate having necessary qualifications, experience and expertise from amongst sectoral specialists and business on honorary basis.

Thus, the Prime Minister can appoint other members of the Board under the FBR Act, he maintained.

The Customs department has the mandate to check smuggling and tariff management which is already done by the National Tariff Commission under Commerce Secretary. The border security force of customs can be separately established for checking smuggling at borders. The Customs can continue anti-smuggling operations and assist the NTC for tariff rationalization.

Former State minister further stated that over 80-85 percent of the revenue is collected by Inland Revenue and major revenue collected at import stage. The IRS is the major revenue collection agency and helps in meeting the FBR’s targets of both imports and domestic taxes. The IRS could continue to report to the Finance Minister and Customs can report to a separate Revenue Minister under the Prime Minister.

Under the existing restructuring plan, the main issues of corruption and automation have not been addressed, Ashfaq Tola added.

The recommendations of the Reform and Revenue Mobilisation Commission (RRMC) report should be implemented without delay for expanding the tax base, raising Tax-to-GDP ratio and increasing revenue collection, former Chairman Reforms and Resource Mobilization Committee stated.

Renowned tax expert Dr Ikramul Haq said that there is a consensus that comprehensive tax administration reforms, much-needed and long-overdue, must be through a public debate involving all stakeholders, rather than discussing and implementing the same behind the close bureaucratic doors.

There cannot be two opinions that FBR or any other tax collection agency needs to be run by a competent board as a short-term reform measure before all of these are finally merged into a single national tax authority, Dr Ikramul Haq added.

Copyright Business Recorder, 2024