FBR reshuffle

FBR reshuffle

Apparently as drastic move Federal Board of Revenue (FBR) has transferred over 3000 employees of Bs-9 to 16 of Inland Revenue Service Department from various field formations in different cities all over the country. Although Member Policy of Inland Revenue Services Department has interpreted the massive reshuffle in the lowers cadres in positive light and described it a measure of enabling the tax collecting employees to enrich their experience. But the revenue shortfall of Rs.600 billion in the last fiscal year may also be a reason for this large scale countrywide transfers and postings. The tax collection targets were missed because of the sluggishness, inefficiency of the Inland Revenue Services Department and nexus between the tax officials and tax evaders.

The sharp decline in tax collection and dismal failure of the Inland Revenue Service Department to implement the directives for expanding the tax base had offended the Prime Minister and former finance minister and there was a loud talk of reforms in the FBR. But when the then Chairman FBR JehanZeb Khan was transferred and his successor was going to be inducted from private sector, the top bureaucracy of the FBR had put up strong resistance against. However, ShabbarZaidi was appointed Chairman FBR for a period of two years.

The revenue collection target for the last fiscal year was over Rs.4.1 trillion and the target for the current fiscal year is Rs. 5.5 billion which cannot be achieved unless the number of active taxpayers is increased and loopholes of tax evasion are plugged. The major thrust of revenue collection is from the small and medium size business organist ions. This class of traders has shown resentment over the taxation measures like the across the board imposition of sales tax in the federal budget, professional tax in the provincial budgets and documentation of retail business. It is pertinent to mention that in the year 2000 the campaign for the documentation of small whole sale and retail business had failed due to the rigid and coercive attitude of tax collectors and a sincere move of documentation of economy fizzled out and had to be abandoned midstream. The Central Association of Traders has announced countrywide strike from 13 July and has vowed to go for shutter down of business houses and holding protest rallies if their genuine demands are not met. Confidence building measures would be needed by taking on board the trade bodies to make this time the documentation of economy drive successful and result oriented. Keeping the income of feudal class from agriculture exempted from income tax levy and the income of lawyers from legal practice may serve as strong reservation for small traders to resist their inclusion in the tax net.

In the past the rampant financial corruption by the ruling political elite and top bureaucrats has been a strong argument of trader against documentation in addition to wasting Rs.1600 billions annually on feeding the white elephants in the shape hemorrhaging Public sectors corporations. The PTI government’s zero tolerance against financial corruption will certainly produce positive results. But it is equally in conflict with taxation cannon of equity and justice to spend lavishly taxpayers’ money on huge losses incurring 56 state enterprises. The State Bank of Pakistan Report states that the borrowings of bleeding Public Sector Enterprises from banks went up by 36 percent to Rs.330 billion in the fiscal year of 2018-19. In FY 18 these entities borrowed Rs.254 billion. The total borrowing of Public Sector Enterprises has reached to Rs. 1.068 trillion. The concept of creating a “Wealth Fund Company” and collecting all loss making enterprises under it did not materialise. The government had announced to exclude PIA and Pakistan Steel Mill from privitisation list and make these organisations once again profitable by restructuring, rightsizing and putting them under honest and efficient managements. Fair enough, the remaining loss-making corporations need privitisation on priority basis. Hopefully, in addition to introducing the conceived or intended reforms in the FBR the burden of bleeding state entities shall also be offloaded.

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