'Halt FBR's purchase of 1,010 cars'
A Senate panel on Wednesday called for cancelling the contract for buying 1,010 new cars for tax officers, but the Federal Board of Revenue (FBR) contended that it needs these vehicles to locate non-filers and physical verification of tax returns filed online.
The committee decided to write to Prime Minister Shehbaz Sharif, the finance minister, and the Accountant General of Pakistan Revenues (AGPR) to stop the purchase of 1,010 new cars, said Senator Mandviwalla, Chairman of the Senate Standing Committee on Finance.
The committee took up the issue of the federal government's plan to procure 1,087 vehicles of up to 1,300cc capacity for grade 17 and 18 officers of the FBR at a cost of about Rs5.6 billion. The FBR has placed the first order of 1,010 vehicles of 1,200cc capacity with Honda Atlas, which Senator Faisal Vawdaa committee memberobjected to.
"There was no competition, and Honda Atlas was directly selected for the contract," said Vawda. He claimed that Indus Motors offered a price Rs200,000 lower than Honda Atlas, but the FBR did not accept it.
Vawda also said that Indus Motors offered a two-year warranty, while Honda Atlas was providing only a one-year warranty.
Freedoon Sheikh, FBR's Chief Administrator, told the standing committee that the FBR sought offers from both Honda Atlas and Indus Motors under the direct contract mode provided in the Public Procurement Regulatory Authority (PPRA) Rules. He explained that due to the cap of 1,300cc on engine capacity, the FBR could not purchase the 1,328cc Toyota Yaris.
The FBR's dilemma arose because the cabinet had approved the purchase of vehicles up to 1,300cc based on a summary moved by the Revenue Division.
Senator Saleem Mandviwalla criticised the FBR for not realising the engine capacity of the Toyota Yaris before seeking cabinet approval.
Sheikh stated that the purchase order had already been issued, and the AGPR had been instructed to process the payment.
"This is a tailor-made contract to benefit Honda Atlas, and the committee should take legal action," alleged Vawda.
The FBR defended its decision, arguing that providing vehicles to grade 17 and 18 officers would help improve revenue collection through better enforcement.
"Can computers conduct raids, seal factories, or check unregistered businesses?" the FBR questioned in a written statement submitted to the standing committee.
The FBR explained that digitalisation can only assist in monitoring taxpayers who are already within the tax net. Locating non-filers requires physical surveys and on-spot inquiries. Additionally, digital data and taxpayer declarations need to be corroborated through physical verification of supply chains and on-site audits, which is not possible without mobility.
"If the FBR can recover the Rs384 billion tax shortfall for the first half of this fiscal year, the standing committee would recommend giving Rs16 billion," said Vawda.
"Our officers are unfamiliar with manufacturing and value addition processes due to a lack of field visits in their areas of jurisdiction," the FBR added.
"Without the mobility to cover the field, achieving the Rs13 trillion tax target remains a daunting task," the FBR informed the committee.
The FBR assured the committee that the vehicles would be provided only to field units and that no officer stationed at the headquarters would receive one.
Honda Atlas had agreed to include additional features, including a navigation system with a reverse camera, high-grade interior, free maintenance for one year, and a fourth-year extended warranty, subject to regular maintenance from authorised dealers.
Meanwhile, the Inland Revenue Service Officers Association (IRSOA), a representative body of FBR officers, criticised the government's newly introduced Rating and Reward System (RRS) and urged its members to boycott it.
In a press statement, the IRSOA described the RRS as a deeply flawed initiative that undermines the professional integrity of the Inland Revenue Service (IRS).
"No other civil service in Pakistan is subjected to such an intrusive and discriminatory review system. The IRS is being unfairly singled out, which is unacceptable," the association stated.
The IRSOA highlighted that the evaluation criteria under the RRS are subjective, allowing room for bias and favouritism.
"Of 50 officers, only 10 can be rated in category A, forcing the remaining 40 to be labelled as corrupt," the association said, describing the system as fundamentally flawed.
The association alleged that the system is designed to ensure that 80% of officers are labelled corrupt since forms cannot be submitted without such labels.
"It is grossly unfair to expect FBR officers to label their peers as corrupt or lacking integrity," it stated.
The association added that the introduction of the RRS would harm the reputation of the FBR, which is already under undue and unfair scrutiny compared to other government departments.
"The RRS is not a reformative initiative but an ill-conceived mechanism that will exacerbate existing challenges rather than resolve them," the IRSOA concluded.
QR system
Separately, the finance standing committee urged the central bank to promote QR payment systems as a cheaper alternative to credit cards, which could help formalise the informal economy.
Shahnawaz Mahmood, CEO of Finnect Company, informed the committee that QR payment systems are popular in regional countries and suggested encouraging their adoption through soundbox devices and simplified merchant onboarding processes.
Finnect has deployed QR payment machines in several cities in Pakistan and is currently the only company operating in this domain, Mahmood added.