Federal Board of Revenue is facing a gigantic task of increasing tax collection to Rs2.475 trillion, requiring a growth rate of 28%. CREATIVE COMMONS
Pakistan has sought the assistance of the United Kingdom’s Royal Custom Service to expand the country’s extremely narrow tax base as Islamabad embarks upon an ambitious plan of increasing collection by 28% and bringing at least 100,000 top tax dodgers into the net this year.
The request was made by the Finance Minister Ishaq Dar during a meeting with the UK Secretary of State for International Development Justine Greening. He said Pakistan will be interested to learn from the experience and expertise of Her Majesty’s Revenue and Customs (HMRC).
Greening said the Department for International Development (DFID) of the UK will look forward to work with the government of Pakistan. She said that Pakistan will be one of the first countries with which the HMRC will share its expertise for expanding the tax net.
Federal Board of Revenue, which is plagued by corruption and had become dysfunctional over the years, is facing a gigantic task increasing tax collection to Rs2.475 trillion, requiring a growth rate of 28%. As part of the recent bailout package condition agreed with the International Monetary Fund (IMF), the government is also required to bring 100,000 top tax dodgers in the tax net by June 2014.
Greening said that the initial steps taken by the Pakistani government were “impressive, setting the right momentum and the tone”, but cautioned that while the planning was extremely critical, delivery is what is even more difficult.
Greening assured Dar that DFID will work closely with the government of Pakistan to overcome the economic challenges faced by the government.
The finance minister said Pakistan has set an ambitious revenue target which will be achieved through good governance, broadening the tax net, brining in 100,000 new tax payers this year, plugging leakages and posting of officials in the revenue department who are competent and have good reputation.
He said that the increase in general sales tax to 17%, granting the FBR connectivity to the banks and levying half a percent tax on immovable assets valued over Rs1 million are some of the measures taken by the government to enhance revenues and achieve the revenue target.
He said the government took various measures in the budget to expand the social safety net, which includes increase in allocation to the Income Support Programme from Rs40 billion to Rs70 billion, expansion of education to students belonging to the three Southern Divisions of Punjab, Malakand, Kohistan, and Dera Ismail Khan in Khyber-Pakhtunkhwa and interior Sindh.
Dilating on the energy situation, the finance minister said that the government has already cleared part of the circular debt owed to the private power companies which will help in optimal utilisation of their capacity. The prime minister, he said, will soon announce an energy policy which envisages power project based on cheaper fuel.
Published in The Express Tribune, July 11th, 2013.
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COMMENTS (16)
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not just tax, whole taxation, accounting structure needs a revamp, my suggestion is to voluntary wind up institute of chartered accountants of pakistan and give it under the supervision of uk CCAB
Even HMRC cnt do anythng .. everyone is corrupt.. people living in 20 to 40 million resident and not paying income tax.. itz not rocket science to collect tax from them..
@Vivek: The most pointless comment, tells me about yourself.
So another reform added in corrupt system. that system which helped politician and bureaucrats.
@ali ahmed: "the highest bidder to run the country" ++++++++++++++++++++++++++++++++++++ What would you like Visa or Dinner?
Solution is very simple: More Islam is needed to run the country efficiently.
There is a pattern here. Just today the EU observers report for the elections has also come out. . If HRMC makes recommendations to identify and prosecute tax evaders, the government can conveniently put the blame on HRMC. If HRMC's suggestions are not implemented, they can still blame HRMC. In any case, it would be naive to think that HRMC will take ownership or responsibility of the revenue collection process. Like all entities who have nothing at stake, they will sugarcoat their advice and the government will convince Pakistani citizens that it is on the right track.
Let us face it : FBR is a dysfunctional organisation which has failed the nation. If you go to FBR website, the Sales Tax Act has not been updated since 2010 on their website. The organisation and it's staff is corrupt and incompetent. ET should investigate that FBR this year inspite of massive failure to meet the tax collection target gave upto THREE bonus to it's staff and officers. Also it is a fact that every officer in FBR gets TWO basic salary. FBR should be disbanded and re-organised afresh
The best solution is to send home all government machinery and new youth be employed as these rulers are SUCKING BLOOD ONLY
we have become incompetent ....for every thing we are asking for foreign help....why not auction the country...the highest bidder to run the country
HMRC brings honesty and integrity that is lacking in the governance of Pakistan. If that was there all civilian and military departments would function and we would not require anyone's help. Just look at PPP's financial scandals involving all the way from top to bottom. You think FBR is not effected??
@Nadir @ModiFied Don't be negative. Pakistani bureaucracy in general and FBR in particular have miserably failed over the years. Time to bring in foreign expertise to revamp the system. If we can accept USAID and DFID money for projects like construction of latrines, 'capacity building' of civil servants etc which do not have any long term sustainable impact then why cant we get their help in revamping an entire corrupted system. Competitive bench marking is common worldwide and especially in corporate sector and has yielded favorable results. Also get in expertise to restructure the railways. British, Indian, Chinese, American I really don't care but its beyond the capacity of Bilours and Saad Rafiqs to streamline an institution like railway which last declared profit in 1974.
Outsource the FBR to the US IRS. Let them IRS create the fear of God in the hearts of Pakistanis who refuse to pay their due share and then keep criticize the government for not providing them services.
Is there anything that Pakistan can actually do on its own ? To solve the energy crises, they need the Chinese and whoever that will listen to them for help ! For funds there is always good old Uncle Sam and the IMF ! For Aid and Grants, the whole world is their target market ! What a great Nation, this is, that even after over 60 years since its inception, they still have not managed to figure out as to how to run their own economy and now are seeking help from those overlords, who rule the land in past, for assistance in regards to Taxation !!!!!!!! This is not only tragic but very sad! Please have some integrity to deal with your own domestic matters, without others assistance !
"She said that Pakistan will be one of the first countries with which the HMRC will share its expertise for expanding the tax net."
What Rocket Science of tax collection HMRC has developed that it will sharing that with Pakistan for the first time ? May be they will advise to tax the fresh air people need for breathing, as everything else is already being taxed. May be HMRC will also open a cell in Pakistan and post some tax collectors.
The HMRC cant even meet its own targets!!
Start with the simple things. People applying for student visas, claiming to be able to pay for their fees and lodging should be required to file tax returns. People applying for UK visas as tourists should be required to do the same. Pakistani passport holders resident in the UK, HMRC should share their tax affairs with FBR and so forth. Its not that complicated, the UK and other OECD countries have started doing just that over the past couple of years.