Eight-member committee will undertake reforms in tax administration. PHOTO: BLOOMBERG
ISLAMABAD: After facing resistance for over three months from well-entrenched bureaucrats, the government has finally notified a high-powered committee that will implement and monitor reforms, proposed by the Tax Reforms Commission (TRC).
Finance and Revenue Minister Ishaq Dar had constituted an eight-member committee, for which the Federal Board of Revenue (FBR) issued a notification on January 15.
Initially, Dar had set up a seven-member committee on October 10 last year, which the FBR top brass fiercely opposed.
The notification was issued after many back and forth meetings between FBR officials and the finance minister. Tax officials moved the notification file for more than 12 times between the FBR headquarters and the Q-block - the seat of the finance ministry, according to officials.
Prime Minister’s Special Assistant on Revenue Haroon Akhtar Khan will chair the eight-member committee. Other members are Masoud Naqvi, TRC Chairman, Abid Shaban, TRC member and Ashfaq Tola, also a TRC member.
From the FBR, its Chairman Nisar Mohammad Khan, Member Inland Revenue Tax Policy Rehmatullah Wazir, Member Inland Revenue Tax Operations Dr Irshad and Member Customs Nasir Masroor will be members of the committee.
The FBR managed to increase its strength in the committee by a member in a bid to ensure that it did not lose to private members in case of voting on any contentious issue.
The bureaucracy was not happy with the constitution of the committee and viewed it as a parallel body. It was established after the bureaucrats created hurdles to implementing recommendations of the TRC, which the government had formed to diagnose problems in the tax structure and suggest a way forward.
The TRC has already submitted its interim report and is in the process of coming up with a final version. It has got six extensions in order to have enough time to complete its task.
Tax collection along with energy supplies remains the weakest area in the economic policymaking. Despite a desire to turn things around, Dar is struggling to bring about a marked change in structure of the revenue board.
A confidential report of the FBR reveals the country is losing $2.63 billion annually due to smuggling that is going on with the support of tax officials, the Frontier Constabulary, Coast Guards and Maritime Security Agency. The smuggling mafia has a strong foothold in the FBR.
Coming into action
The monitoring committee will soon start deliberations and push the government to implement short-term recommendations first.
In its interim report, the TRC has recommended that in the short term, the FBR has to massively invest in information technology and its current IT backbone provided by the Pakistan Revenue Automation Limited should be placed under an independent board and run by an IT specialist. In the long term, it proposed, the IT function should be outsourced.
The TRC also recommended abolishing the FBR. In the medium to long term, it suggested, there was a need to set up the National Tax Agency to collect all taxes at federal, provincial and local levels.
It proposed measures to discourage non-disclosure, non-compliance and evasion of taxes and severe accountability of FBR officials and non-compliant taxpayers.
In the short term, according to the TRC, there is a need to analyse compliance with tax regulations and come up with a comprehensive framework for the ‘Compliance Risk Management’.
This programme should comprise identification, assessment, prioritisation and treatment of compliance risks, and monitoring and evaluation of the impact of treatment strategies as part of a revenue body management strategic process.
Published in The Express Tribune, January 23rd, 2016.
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