An article was published in the “Business and Finance Weekly” section of DAWN newspaper on 27th August, 2018 by Mr. Khaleeq Kiani. The article caused quite the stir. I find the argument to be flawed at many levels but most importantly on two points.
One, giving the reigns into the hands of people who are non-bureaucrats is demoralizing to say the least and impractical to say the most. The five key positions were rightly pointed out but people who govern these positions should be those who are fully aware of the ground realities of the field, the limitations faced by the field formations and they should preferably have a hands on experience of the enforcement of the tax laws.
An outsider will only rely on popular economic/tax research and maybe some of their own to reach conclusions that have worked for developed nations, tax reforms that gained worldwide popularity and administrative changes that are in keeping with international standards – measures that don’t even dust the surface of what FBR needs right now.
Secondly, I agree that we need to tilt towards a more progressive system of taxation meaning a lean towards a higher percentage of tax revenue from direct sources like income tax. I agree that indirect tax places an undue burden on the common man and is one of the main reasons for growing inequality within the country – but the answer is not in the evolution of a new Sales Tax Cadre. The solution is to ensure that the field is rightly equipped to take the enforcement challenge head on. The solution is to recognize that there is a dearth of human resource. By creating a separate Sales Tax group we will only ensure a competition. And when Sales Tax will compete with Income Tax, indirect taxation is bound to go up.
But apart from all of this – this article covers everything except the real concerns and the real problems. Until and unless someone talks to the field formations and actually listens to what they have to say, nothing can change.
For example, the article talks about the Whistle Blower law but fails to account for the fact that tax Reward Rules were promulgated for exactly the same reasons – tax demands and recoveries that have stood the test of appeal will make the officer concerned and their whole team legible for a reward equal to a substantial percentage of the total tax recovered.
This initiative boosted the morale of many in the field and revenue collection efforts were renewed with a fervour but in vain. Sadly, this article makes no mention of this and perhaps the writer is unaware, much like the gazillion other things that people outside the immediate tax machinery are unaware off, resultantly can never understand and henceforth cannot rectify.