EDITORIAL: The Chief Justice of Pakistan’s proposal to establish dedicated benches for tax-related cases is a timely and commendable recommendation. With tax litigation clogging the judicial pipeline and creating inefficiencies across the system, such measures are essential for economic and judicial reform.
Currently, nearly one-third of tax disputes are ruled against the Federal Board of Revenue (FBR), exposing not only flaws in the tax framework but also the lack of procedural justice. Addressing these issues requires a multi-faceted approach, with dedicated benches playing a central role.
Tax litigation has significant implications for both taxpayers and the state. On the one hand, businesses and individuals face delays that disrupt operations and deter compliance, while, on the other, the state loses billions in prolonged disputes and unrecoverable revenue.
Dedicated benches would ensure faster disposal of cases, allowing businesses to refocus on economic activities and enabling the state to recover funds tied up in legal proceedings. Moreover, specialized benches with expertise in tax laws can reduce the inconsistency in rulings, building confidence among stakeholders in the judicial process.
Be that as it may, merely creating dedicated benches without addressing underlying systemic flaws would only provide partial relief.
A key factor behind the growing volume of tax-related litigation is the FBR’s practice of pursuing overly aggressive targets set by government authorities. These targets, often detached from economic realities, force tax officials to adopt coercive measures and raise frivolous demands, leading to disputes that eventually land in court. Additionally, incentives tied to creating such demands to achieve these targets encourage a “collect at all costs” mindset among tax officers, further exacerbating the issue.
Another benefit of dedicated tax benches is their potential to reduce the burden on existing judicial resources. Tax disputes often involve complex financial and procedural nuances that general court benches may struggle to resolve efficiently.
Specialized benches, staffed with judges and legal experts familiar with tax law, can streamline proceedings, reduce delays, and ensure that cases are adjudicated with a focus on economic principles and legal precision. This would free up resources for other critical areas of the judicial system, improving overall efficiency.
Beyond judicial reforms, the government must recalibrate its approach to revenue collection. Setting realistic and achievable tax targets is imperative to reducing the adversarial relationship between the FBR and taxpayers. Encouraging voluntary compliance through taxpayer-friendly policies and reducing the frequency of coercive audits would significantly lower the incidence of disputes.
The FBR also needs to invest in capacity building, ensuring that its officers are equipped to engage with taxpayers transparently and fairly.
In conclusion, the establishment of dedicated tax benches will be a progressive step that can address many of the challenges facing the judicial and taxation systems. However, it must be complemented by reforms on the policymaking and administrative fronts to truly transform the tax landscape.
Faster resolutions, reduced legal costs, and improved public trust in both the judiciary and the FBR are outcomes worth striving for. A fair and efficient tax system is not just an economic necessity; it is a cornerstone of public confidence in governance.
Copyright Business Recorder, 2024