The country’s revenue collection is anemic but that doesn’t stop its tax collectors from bickering amongst themselves and jeopardising prospects to meet current year’s collection targets.
Infighting in the Federal Board of Revenue (FBR) has intensified to the extent that tax officials are on the verge of bypassing a parliamentary act and have involved external players to settle personal scores, documents available with The Express Tribune reveal.
According to the documents, new efforts have been launched to dismantle the recently established investigation and intelligence directorate general and undermine the role of the Inland Revenue Service (IRS) – the department responsible for almost 90% of the country’s tax collection.
Under tax reforms, the government merged the income and sales tax departments into a single entity – the IRS. The tax services were integrated to minimise chances of evasion by authorising a single officer to deal with income and sales tax affairs.
Attempts to sabotage the new department were made after reports of figure fudging in annual tax collection numbers started appearing in the media, documents show.
(Read: FBR infighting caused misreporting of tax figures)
On July 15, while the IRS head was abroad, a junior officer of the department and the acting head, Iftikhar Qutab, wrote a note against the unification of income and sales tax departments and creation of the investigation and intelligence directorate-general (DGI&I) that was exclusively established for overlooking affairs of the IRS.
In his note to Chairman FBR, the acting head said “the amendments in the relevant statutes creating Intelligence and Investigation for Inland Revenue purpose were made … despite your instructions to the contrary.”
He said the FBR should not create another police force and instead keep the tax evasion cases with the Directorate General of Customs – a suggestion against the spirit of a parliamentary act.
The chairman, however, was onboard since the government established the DGI&I through Finance Act 2011.
According to official documents, the creation of a separate force was discussed in the highest decision-making body of the FBR, the Board-in-Council, on February 23, 2011.
The acting head also said that the new skeleton force would not be able to perform.
Documents reveal, however, that in the initial months after its creation, the new force recovered Rs4.3 billion from various banks in Karachi without resorting to any extreme steps.
The old force currently restricted to customs affairs, on the other hand, managed to recover Rs2 billion, after registration of criminal cases.
On learning about the note to the chairman, the IRS department stopped the file and referred it for comments to relevant authorities who found the comments against the new directorate general unfounded and in violation of the parliamentary act, documents reveal.
Documents also show that the acting head wrote: “The Federation of Pakistan Chambers and Commerce and Industry (FPCCI) and the All Pakistan Textile Manufacturers Association (Aptma) have vehemently started demanding separation of the post of inland revenue at FBR level into two categories – one for income tax and the other for sales tax and excise”.
Chambers have complained that with the establishment of the IRS department, the taxpayers’ problems have multiplied and complaints of corruption and malpractices have increased manifold, the note added.
President FPCCI Senator Haji Ghulam Ali, however, told The Express Tribune that no businessman has complained against the IRS department to him nor has he lodged any complaint with the FBR.
APTMA chairman Gohar Ijaz also said that he did not lodge any corruption complaint against the IRS department.
He did say, however, that the APTMA feels that the income and sales tax services should be separated.
Fighting hampering work
The internal fighting is hampering tax collection efforts and the IRS department is working with a depleted force.
Despite the passage of almost two months, tax authorities have failed to set a new collection target since the target approved by parliament became redundant after the tax figure fudging controversy.
A recent proposal to fill strategic positions in the FBR is also awaiting the chairman’s approval.
Published in The Express Tribune, August 20th, 2011.