EAC’s subgroup tasked to double tax revenue

ISLAMABAD: The government on Friday tasked its new economic team to double revenue collection of the apex tax authority to an ambitious eight trillion rupees from the current fiscal year’s target of Rs4.4 trillion without giving any specific time frame.

The government constituted a subgroup of the Economic Advisory Council (EAC) to devise strategy for jacking up the tax collection.

The subgroup of economists will comprise renowned economists, including Ijaz Nabi, as convener, and members Farrukh Iqbal, Asad Zaman, Naved Hamid and Sakib Sherani.

Even if the Federal Board of Revenue (FBR) achieves the feat to double its collection in five years, it will not be considered an achievement because the last Pakistan Muslim League- (Nawaz) led government doubled collection to more than Rs3.8 trillion in 2018 from Rs1.94 trillion in 2013.

Now it is yet to be seen that how the ruling Pakistan Tehreek-e-Insaaf develops its strategy to double the FBR collection within its tenure.

The subgroup on fiscal policy was tasked to develop tax policy by end of the next month.

If the government shows reluctance in separating fiscal policy from tax administration, then it would not be able to achieve its desired goals of reforming the tax administration. The efforts to bring reforms into FBR abysmally failed in the past despite use of multimillion dollars of loans from the World Bank and grants from Department for International Development.

The government, in the maiden session of EAC, had committed to set up working groups on debt, fiscal and current account.

Tax experts asked the new government to constitute a fiscal/tax policy board for making a viable tax policy for FBR and restrict its functioning to tax administration and revenue collection alone. The experts said tax authorities don’t draft fiscal policy in most of the tax administration matters. The proposed fiscal/tax policy board should have a separate setup, including its office/building, officials and members, they added. It would work independently with no interference of the FBR.

A tax expert said the only way to improve the working of the tax machinery is to separate the functions of tax policy from tax administration.

The FBR makes tax policy with an objective of revenue generation and increasing collection.

“And, therefore there is a conflict of interest,” the expert said. “The tax policy should be framed by an independent fiscal/tax policy board for the FBR and it should be the duty of the FBR to implement the policy.”

The tax expert said the board should chalk out the tax policy and the FBR should execute the policy in the field formations.

Early this month, Prime Minister Imran Khan constituted a 18-member EAC to ensure that the best possible professional advice is available to the government to inform, optimise and synergise the formulation and implementation of its economic and financial policies.

There are seven official members of the EAC, including minister for finance, revenues and economic affairs, minister for planning, development and reforms, deputy chairman Planning Commission, governor State Bank of Pakistan, adviser on institutional reforms, adviser on commerce and secretary finance. It also has also 11 members including renowned economists, researchers, academicians and others. Some of them belonged to foreign reputed institutes of the world, mainly from US and UK.

The EAC is to meet at least once a month and its mandate is to advise the government on both short-term macroeconomic stabilisation interventions and long-term structural reforms.