EDITORIAL: Is it any surprise that the Federal Board of Revenue (FBR) failed to meet its revenue target yet again in the last fiscal year, this time by Rs100 billion – Rs9.3 trillion against the original target of Rs9.4 trillion? Now what of the prime minister’s repeated boast that “the country has the potential to collect well over Rs24 trillion against the annual tax target of Rs9.4 trillion”? His own lament, that an amount of around three times the annual revenue target was “going down the drain due to corruption, inefficiency and negligence”, provides the perfect answer.
It’s also quite shocking how someone, somehow, at some time, just arbitrarily revised the revenue target down from Rs9.4 trillion to Rs9.252 trillion without any explanation. Yet it’s not surprising at all that FBR is citing the revised number to claim victory in its quest for meeting the target last year. But in real terms, for most hard-working, taxpaying Pakistanis, this just means that once more the tax target has been missed, which means more will have to be squeezed out of them in the current fiscal year.
It’s almost comical that despite all this the PM has ordered FBR to “pull its socks up”, “show results”, etc., but there’s still nothing concrete about any sort of reforms that are so desperately needed; not just FBR reforms but also tax structure and taxation reforms. It’s no secret any more that the Board remains bloated and overstaffed, with far too many incompetent, inefficient and/or corrupt officers filling its ranks from top to bottom.
It’s also very clear that FBR gets institutional help – from elements within the government – to resist attempts to chop off some of the dead wood and shake it into a more effective organisation. And whoever has tried to turn it into an efficient 21st century outfit has instead been ultimately forced to walk away in shame.
The same is true for all efforts to expand the tax net. For example, everybody knows how the feudal elite suspends all its political battles and unites whenever a serious attempt is made to tax agriculture; like 60 MNAs from all across the bitter political divide joining forces to confront and threaten Shabbar Zaidi when he thought he’d be the FBR chairman to finally implement the agri tax.
But now that we’re at the very edge, and extremely contractionary IMF bailouts are the only thing keeping the country from defaulting, the need for reforms is greater than ever. Yet the government shamefully goes on with taxing the salaried class and not taxing its own favoured sectors, which assures that this and coming fiscal years will also most likely see the tax target missed, piling further pressure on the few honest Pakistanis that do pay their taxes, and assuring an implosion in the economy with or without a sovereign default.
This is a completely self-made crisis. And the biggest reason is incompetence, lack of appreciation of the problem and the will to handle it right at the very top of the country’s political food chain. That is why we always go round in circles and our tax-to-GDP ratio is one of the lowest in the whole world. And nothing at all is being done to address this problem properly.
Copyright Business Recorder, 2024