Finance Minister Dr Shamshad Akhtar, on Thursday, condemned the Federal Board of Revenue (FBR) for obstructing her efforts to reform the inefficient tax machinery. Simultaneously, she asserted that she would retain her position as the chairperson of a publicly listed company.
“The FBR is giving me a hard time, but I will persist, and when it becomes unbearable, I know where to go,” said the finance minister, addressing opposition to the FBR’s restructuring at a seminar organised by the National University of Science and Technology (NUST) on economic challenges and the way forward.
The minister’s comments followed the FBR chairman’s statement a day earlier, indicating the need for 1,000 legal changes to implement the proposed restructuring. The Senate Standing Committee on Finance also opposed the restructuring, citing it as beyond the caretaker government’s mandate.
“You receive abuses day and night for touching the FBR, but I will continue the struggle to reform it until the last day in my office,” vowed the minister. She challenged those who claimed she lacked the mandate to restructure the FBR, urging them to step forward and take charge.
The Special Investment Facilitation Council (SIFC) approved the FBR’s restructuring on January 3rd, granting the interim government one month to complete the exercise. Despite approval, differences persist between the FBR chairman and finance minister regarding the restructuring’s modalities.
“I am blamed for destroying the FBR, a symbol of national pride,” remarked Akhtar. “But my aspirations are to increase the dismal FBR tax-to-GDP ratio from 8.5% to 20% in two years through digitisation, ending exemptions, and improving governance,” she added.
She explained that the FBR’s restructuring plan aims to enhance revenue mobilisation to a minimum of 15% in the first phase and rationalise the tax regime for pro-growth policies. Her ambition is to elevate the tax-to-GDP ratio to 20%, aligning with public expenditures.
The plan involves separating tax policy and tax administration functions to eliminate potential conflicts of interest in tax collection. Customs is also undergoing reforms to boost vigilance against smuggling, under-invoicing, and enhance trade facilitation.
Read Senate opposes FBR overhaul before elections
The finance minister stressed the need for tax policy to be fair, equitable, and productive, urging the expansion of the tax base, reduction of exemptions, and the implementation of a more efficient digital tax administration.
This marks the first public disclosure by the finance minister regarding the FBR’s restructuring. Akhtar urged boldness and dismissed criticism from vested interests, underscoring that the public supports her endeavours.
Addressing accusations of holding conflicting roles, Akhtar clarified her position on continuing as the chairperson of Sui Southern Gas Company Limited (SSGCL) while assuming the finance minister portfolio. Daily Dawn reported potential conflict of interest this week.
“I have been accused of conflict of interest due to holding the portfolios of the finance minister and the chairperson of the SSGCL, but I think the ministries have conflicts of interest,” stated Akhtar.
She highlighted her achievements in revamping SSGC, reducing gas losses to 7% in Sindh. “I have not done anything wrong. I will not take the ministry but will stick with the company that I have transformed,” she said, claiming that being a caretaker minister is not a conflict of interest, as it does not entail holding a public office.
She criticised ministries for opposing the restructuring of state-owned enterprises (SOEs), pointing out that the day-to-day affairs of the finance ministry are managed by the finance secretary, thereby eliminating any conflict of interest.
Under the previous $6.5 billion International Monetary Fund (IMF) programme, Pakistan enacted the SOE Act 2023, now integral to the current $3 billion programme. However, Secretary Finance Imdad Ullah Bosal revealed that the government has yet to frame the SOE rules. Section 11 of the SOE Act prohibits holders of political office, whether in a legislative role or not, from serving as independent directors.
The finance minister highlighted that she was not holding a public office but was a caretaker minister.
Published in The Express Tribune, January 19th, 2024.
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