Finance Minister Ishaq Dar on Saturday stopped the Federal Board of Revenue (FBR) from its illegal move to award its officers allowances by diverting taxpayers’ money, remaining short of suspending people who executed the plan.
“Keeping in view the current economic situation in Pakistan, the federal minister for finance has taken notice of the matter and directed the FBR to put the implementation of these rules on hold,” said a statement issued by the Ministry of Finance.
The Express Tribune had reported earlier that in an irregular and unethical action, the FBR notified new rules to divert taxes and fees for the distribution of allowances among its officers including the chairman and other personal benefits to officers belonging to the Inland Revenue Service (IRS).
Fresh details, which emerged on Saturday, revealed that the director general of digital invoicing opposed the diversion of funds, originally meant for technological upgrade of the Points of Sale (POS) system, but other officers prevailed upon him, sources said.
Initially, the FBR wanted to divert 100% of the POS funds but on the insistence of DG invoicing, 10% was left for technological up-gradation.
The finance ministry stated that through the Finance Act 2019, Section 76 was inserted into the Sales Tax Act 1990, which empowers the FBR with the approval of minister in charge to impose levy, fee and service charges on tier-1 retailers of Re1 per invoice.
Subsequently, the FBR with approval of the then federal finance minister levied the POS service fee of Re1 per invoice on tier-1 retailers.
However, the finance minister at this stage did not take any action against the FBR for violating the laid-down procedures.
An official of the Prime Minister’s Office stated that no rules could be notified without approval of the federal cabinet, which in fact meant the federal government.
The tax machinery had quietly notified the new IRS Common Pool Fund Rules 2023 without seeking prior approval of the federal cabinet. However, the FBR defended the illegal diverting of taxpayers’ money towards personal use, saying the “FBR’s salary is not even equivalent to half the salary of other government institutions like FIA, IB, NAB, PAS, PSP and other civil service groups”.
Surprisingly, no rules authorise the FBR to misuse the money received from the poor and rich people for technological up-gradation. The FBR charges Re1 per invoice even from a person whose monthly income may be only Rs10,000.
The rules showed that the IRS Common Pool Fund had been established, which would be fed by up to 90% of the collection of “Point of Sale (POS) service fee”.
Every citizen pays Re1 on every invoice generated at the time of shopping and the total collection runs into hundreds of millions of rupees, which will now be used for the personal benefit of taxmen, including the chairman.
Earlier, the FBR had planned to utilise the receipts for paying the “headquarters support allowance” to all grade 17 to 22 officers.
The officers of grade 17-18 and grade 19-20 would receive Rs20,000 and Rs30,000 monthly allowance, respectively. Grade 21-22 officers will be given Rs40,000 additional monthly allowance.
All FBR members and its chairman are in grade 21 and 22, who have devised the plan to use the POS fee for officers’ mess, according to the new rules that have not been suspended.
Published in The Express Tribune, February 5th, 2023.
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