The federal government on Saturday succumbed to pressure and uncapped special allowances for the employees of the Federal Board of Revenue (FBR), which had been halted last year following reports of tax dodging. To discourage misuse, the premier has consented to the finance ministry’s proposal to rename it a ‘performance allowance’, to be granted only to those employees of FBR who meet specified criteria.
Prime Minister Yousaf Raza Gilani took the decision on a summary forwarded by Ministry of Finance, on the insistence of the FBR Chairman Mumtaz Haider Rizvi. The decision will cost the taxpayers a billion rupees per annum.
In 2001, employees of FBR were allowed a special allowance equal to 100% of basic pay. The privilege was extended on the pretext of taking care of integrity, improving FBR’s image amongst stakeholders and motivating revenue collection, according to a summary.
The allowance was not meant for all employees: it had to be given to those in predefined special posts which required skill and competence. FBR personnel were to be assigned to these posts in a transparent manner and the continuity of provision of the special allowance was to be decided after periodic performance reviews. None of these conditions were observed.
The allowance was frozen on July 4 last year, following revelations that the FBR had fudged tax figures and bridged its revenue shortfalls by obtaining advances from various corporations and banks. During probes, massive misuse of the special allowance was observed and even the Auditor General of Pakistan discouraged the practice of extending special allowances.
Employees of FBR had been on strike for the last two weeks.
The move was aimed to exert pressure on the government, in the middle of tax authorities’ desperate efforts to achieve this years’ ambitious revenue target of Rs1,952 billion. In March, FBR fell short of the monthly target by Rs32 billion and had to roll over the shortfall to this month; but efforts have been badly hurt by the ongoing strike.
This is the second such decision in 24 hours where principles have been compromised. Earlier, the FBR had delayed the implementation of statutory regulatory order 191 (SRO 191) – aimed at documenting the black economy – yet again.
The premier also turned down a proposal seeking to initiate disciplinary action against those employees who resorted to strike and obstructed revenue collection efforts.
The premier rejected another proposal wherein it was advised to refer the matter to the Pay and Pension Committee, working under the chair of Dr Ishrat Hussain, former governor of the State Bank of Pakistan. The committee’s task is to harmonise the salaries of various departments.
While FBR employees have managed to exploit the government’s weaknesses, there are apprehensions that other government departments may also resort to such actions while demanding special allowances.
These concerns have been shared with the prime minister in a summary tabled by the finance ministry. “If their (FBR’s) request is agreed to, it may lead to similar demands by other departments such as the armed forces, police, the National Highway Authority and the Motorway Police,” it said.
Published in The Express Tribune, April 22nd, 2012.