Pakistan

Taxmen as corrupt as society: FBR chief

The meeting had been called to discuss budgetary proposals for the next fiscal year

Shahbaz Rana March 17, 2017

The meeting had been called to discuss budgetary proposals for the next fiscal year. PHOTO: REUTERS

ISLAMABAD: The head of the government department that is responsible for collecting taxes on Thursday said that tax officials were as ‘corrupt’ as society. “The Federal Board of Revenue (FBR) bashing will demoralise the force… and we should not forget that the FBR is as corrupt as [our] society,” said FBR Chairman Dr Mohammad Irshad during a meeting of the National Assembly Standing Committee on Finance and Revenue.

Parliamentarians and the business community unleashed a volley of angry questions at the FBR chairman over growing corruption and inefficiency in his department.

Why are we failing to end corruption?

It seemed the chairman’s comments were not out of sync. Soon after the meeting ended, the committee chairman, Qaiser Ahmed Sheikh, almost ran after Irshad and allegedly sought some ‘favour’.

Ideally, there should not be any contact between the standing committee and the FBR, because the committee performs the parliamentary oversight role.

The meeting had been called to discuss budgetary proposals for the next fiscal year. The committee’s proceedings revealed that industrialists and traders, who have been undoubtedly the most pampered ones by the present government, turned out to be the unhappiest people throughout the committee proceedings.

Instead of giving specific budget proposals, the majority of them complained about “harassment” they faced at the hands of tax officials and rampant corruption in the tax machinery.

“The FBR is corrupt to the core and is the reason of all the problems the businesses community has been facing,” said PTI MNA Asad Umar. He said according to various independent assessments done by reputed economists, 70% to 93% of FBR people were corrupt.

The standing committee chairman and representatives of various chambers alleged that the FBR people were not paying refunds without taking bribes.

“Issuance of refunds has also resulted in significant corruption at FBR field offices and beyond,” according to a Tax Reforms Commission (TRC) report that largely remains unimplemented.

ECP accused of protecting the corrupt

The TRC also noted that the tax system was marred by tax evasion, under-reporting, tax fraud, corruption, smuggling and under-invoicing to name a few. Corruption remains one of the major issues for Pakistan that also affected its international reputation.

According to the latest global Corruption Perception Index, Pakistan ranked at 116, which was somehow better than three years ago.

“Pakistan suffers from financial crimes associated with tax evasion, fraud, corruption, trade in counterfeit goods, contraband smuggling, narcotics trafficking, human smuggling/trafficking, terrorism and terrorist financing,” states an International Narcotics Control Strategy report of the State Department. The report was released early this month.

The FBR chairman said corruption was not possible without active involvement of those who blame the FBR for corruption.

“My department should not be blamed for highhandedness because the FBR is only implementing laws approved by parliament.” He said if parliamentarians have issues, they should amend the law instead of blaming the FBR.

The FBR chairman’s remarks highlighted a fallacy in our system. The majority of members of the National Assembly do not read the Finance Bill.

“The attitude of young officers of the FBR is very hostile towards the business community,” said Zubair Tufail, President of the Federation of Pakistan Chambers of Commerce & Industry.

He proposed that the FBR’s powers to raid business premises should be withdrawn and urged the FBR to not treat individuals and association of persons as their “withholding tax agents”.

At present every person or company having over Rs50 million annual sales is a withholding agent of the FBR. Due to this legal issue, the FBR has been sending tax recovery notices and raiding business premises on charges of less deduction of withholding tax by those people.

Over the past three and a half years, the government has drastically changed the tax structure, which is now heavily tilted towards indirect taxes – including withholding tax.

“At present about 87% of the total tax collection is on account of indirect and withholding taxes,” said Asad Umar.

Published in The Express Tribune, March 17^th, 2017.

COMMENTS (10)

Hidden truth | 7 years ago | Reply Like father like son. Like people like society. What's the big deal?

MUHAMMAD KAUKAB | 7 years ago | Reply The real issue is that tax laws are not adhered to by the FBR authorities. Sales Tax is based on self-assessment procedure and the Returns filed by a registered person is deemed to be correct unless proved otherwise by the Department. The only tool available with the Department to prove that the return filed by the registered person is to conduct the audit of the taxpayer. The Department issues notices to the taxpayer under various provisions of law without conducting audit of the taxpayer on the basis of presumptions which is illegal, and when taxpayer approaches them there is a demand for illegal gratification on the threat that otherwise there unit will be blacklisted. The Chairman FBR if serious for minimizing corruption should issue orders to the field formations that no notices shall be issued to taxpayer prior to conducting audit to implement the law in its true spirit and restrain them from arbitrary action.

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Naseeb Ali | 7 years ago | Reply I am shocked at statement of Chairman FBR and the Senate and National Assembly and the government should take notice.

Ayesha Aly | 7 years ago | Reply It seems the Chairman FBR (aka Advances) is accepting corruption in Organization he is heading.his excuse for corruption is lame. Seriously the national organization FBR deserves a better leader. As to FBR officers being demaralized,they should quit if they cannot stand criticism. They have by withholding refunds,taking advances and harrasing business nearly destroyed organised business in Pakistan.

Hasan.Khan | 7 years ago | Reply FBR probably is most corrupt organization in Pakistan and the present Chairman FBR is evidently condoning it. Keep it up.............the present Chairman retires in about 40 days and has recently been demoted by Supreme Court of Pakistan

Mahmood | 7 years ago | Reply Give him credit where its due - I'm glad that he's as forthright to accept this - all eyes on what he can do to root it out..

AK | 7 years ago | Reply Yes Mr Chairman, You are right. “The Federal Board of Revenue (FBR) bashing will demoralise the force…" WE should congratulate and encourage the FBR to excel in corruption so that they can become a role model for our "corrupt" society. Which world do you inhabit Sir? Not everyone is corrupt in our society. Why doesn't FBR learn from them rather than give an insulting excuse for your corruption and incompetence?

Parvez | 7 years ago | Reply The relationship between corruption and accountability is inverse......zero accountability, maximum corruption.

zaheer ahmed | 7 years ago | Reply There is main corruption in the refund procedures along with other taxation. Even the %age of commissions is negotiated freely. The corrupt department has ruined the the country and it is said that 50+ % of high officials of FBR are having dual nationalities just to run when required. Most of them are having their families there. The Finance minister / P.M can not take action against any body as FBR people already know their previous weaknesses.

H.A.Khan | 7 years ago | Reply This statement from FBR Chairman is a lame excuse and a very poor defence for rampant corruption in FBR. He should stop corruption in FBR rather than defending it.Mr Asad Umer is right when he stated that per various reports 70 to 93% of FBR officers/staff are corrupt. FBR has become a dysfunctional government organisation and is very quickly driving the country into serious economic crises due to low tax collection ie low tax to GDP ratio. FBR shows pumped up tax collection by taking "advances" from large tax payers and not issuing refunds which now are in excess of Rs 150 billion.

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