New nameplate?

The government's reported plan to create a new tax collection agency - or at least restructure the Federal Board of Revenue (FBR) - may be the best example of 'old wine in a new bottle' that we have seen in years. The FBR has many problems. It is on course to miss this year's target by an estimated Rs650 billion, its tax-to-GDP ratio is stuck at 10.3%, and it fell short of last year's original goal by over Rs1.1 trillion. The agency also needs better leadership. But it doesn't need a new name, just as the 2007 name change in 2007 - from Central Board of Revenue to FBR - only massaged a dictator's ego with little net gain in the eyes of the public.

Other half-baked attempts at change have included a Rs55 billion "transformation plan" launched in 2024, and the caretaker government's efforts to carve out Customs from Inland Revenue. Each exercise promised efficiency, even though it left the core problem intact - the tax base is still narrow, enforcement against powerful interests remains weak, and the compliance culture punishes the documented while the undocumented flourish. Critics have also noted that reforms often include glaring loopholes, since honest efforts to fix the system would also mean withdrawing billions of rupees worth of unnecessary perks and privileges.

Instead of the massive overhaul needed to improve the workings of the tax authority, we are getting the same dynamism from 2007 that saw the FBR Act introduced with no attempt to actually make the agency more effective.

But at least the FBR has put one concerning rumour to bed - namely, that tax collection could be outsourced. As for the perceived positives in the proposal, there is a case to be made for structurally separating audit, assessment and enforcement to curb collusion. But these things can be done within the existing framework. Instead of new organisation charts, the FBR and policymakers need to focus on enforcing the law equally, digitising without loopholes and stopping treating tax reform as a donor-pleasing ritual.