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.
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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 17th, 2017.