Appeals against tax rulings delay justice, says ombudsman

FTO seeks curbs on FBR’s right to appeal to the president.

ISLAMABAD:

The Federal Tax Ombudsman (FTO) has urged the government to restrict powers of tax authorities in lodging appeals with the president against its decisions, which is causing a delay of up to three years in dispensation of justice.

Speaking at the first meeting of an advisory committee on Monday, FTO Dr Shoaib Suddle said the Federal Board of Revenue’s (FBR) right to appeal against the verdict of FTO has created unnecessary problems for the complainants and suggested that the finance minister should approve the appeal before it lands in the presidency.

The FTO office is tasked with eliminating tax maladministration and addressing taxpayer grievances against tax bosses. Suddle said in most cases FBR implements FTO judgments but a quarter of the complaints go to the presidency as per powers enshrined in FTO law.

He said around two-third complaints his office receives pertain to maladministration in income tax, one-fifth concerns sales tax and the remaining are related to customs. Of these, he said, customs-related complaints were of serious nature.

Suddle said last year FTO settled various complaints of taxpayers that resulted in payment of Rs12 billion refund – Rs7 billion on complaints and Rs5 billion through suo motu action. He said this year up to May, Rs3.1 billion refunds were paid on decisions of FTO.

“The government will review the proposal of examining FBR’s representation powers to the presidency,” said Finance Minister Dr Abdul Hafeez Shaikh.

Yet another committee to improve tax administration

The FTO office has constituted the advisory committee comprising economists, tax and law experts and eminent personalities from the industry with an aim to fix issues related to the tax machinery - a dream that has so far remained unfulfilled despite spending of billions of rupees.

However, it is yet to be seen how effective this committee would be as almost half a dozen committees are already working for devising a mechanism to bring improvement in FBR. Interestingly, some of the members of the new committee are also members of earlier committees. The members are entitled to stay in luxury hotels during meetings of these committees.

“Reforms in tax administration cannot yield results without accountability,” said Suddle, adding, the advisory committee has been given a mandate to find a method for addressing too many complaints against tax collectors that will ultimately help in increasing tax collection.

He said failure to perform statutory duties, reluctance to pay compensation to the complainants, failure to implement judicial decisions and different interpretation of same rules and laws by field offices of FBR are common problems in the tax machinery.

FTO has constituted four sub-committees to identify and solve the problems. The first sub-committee has been constituted for diagnosing tax maladministration and suggesting sustainable remedies. Another sub-committee has been formed for expanding FTO’s outreach and suggesting ways and means for its improvement.

The third panel has the task to prepare proposals for widening the tax base in the context of a fair, just and transparent tax system. The last sub-group would work for preparing a code of conduct for the advisory committee and also a taxpayer Bill of Rights. The members of the committee have proposed to incentivise major taxpayers by socially recognising them.





Published in The Express Tribune, June 21^st, 2011.