Money Matters

Time is of the essence

Money Matters
By Zeeshan Haider
Mon, 07, 20

In his speech in the National Assembly after the passage of the budget, Prime Minister Imran Khan said the previous two political governments changed the ten or eleven heads of the PIA in their ten-year rule.

In his speech in the National Assembly after the passage of the budget, Prime Minister Imran Khan said the previous two political governments changed the ten or eleven heads of the PIA in their ten-year rule.

He questioned how an institution can perform if its heads are shuffled so frequently, as on average the head of the PIA was changed after every year, rather less than that.

But a few days after that speech, his own government changed the chairperson of the Federal Board of Revenue (FBR) for the fifth time in its almost two years in office. It means each chairperson of the top tax collecting body could serve less than six months.

Interestingly, the recent appointment is a stop-gap arrangement until a suitable candidate is found to be appointed as chairperson for the full three-year tenure.

The official announcement about the appointment of Javed Ghani as acting chairman FBR, which came on official holiday, said nothing about the reason behind the removal of Nosheen Javed Amjad who could stay on the post for less than three months. But it looks strange that the differences over transfers and postings were reportedly one of the reasons behind Amjad’s removal.

The Pakistan Tehreek-e-Insaf (PTI) government which came to power with a slogan of “change” had promised that its rule would show a clear break from the past where decisions were made on ad hocism.

It has remained a practice in the past that the FBR chairman was appointed with the sole objective of achieving the tax collection target.

Over the past several decades, Pakistan has been regularly seeking bailout packages from the IMF to skip the balance of payment crises. Successive governments have been committing ambitious revenue targets in the talks for these bailout packages and the FBR had been tasked to achieve that target and most of the time it failed.

Taxation expert, Shabbar Zaidi, was the longest serving FBR chairman under the present government who remained in his position for 11 months. He was tasked to achieve the target of 5.5 trillion rupees in tax revenue, but the collection remained less than four trillion rupees.

Though he resigned from the post under the pretext of his illness, his differences with the de facto finance minister Abdul Hafeez Sheikh were reported as the main reason behind his removal. Policy differences are also said to be a major reason behind Nosheen Amjad’s removal.

Javed Ghani, her temporary replacement, is likely to head the FBR for three months maximum, which means that the permanent chairman would take over somewhere in the middle of the current fiscal year.

For all practical purposes, the new chairman would have six months to achieve the revenue target set for him by others. He or she has never been part of the consultations during which this target was set. Failure to achieve unrealistic revenue targets always leads the FBR to resort to very well-known practices to show inflated revenues.

The FBR officials recently admitted before the National Assembly Standing Committee on Finance that they withheld sales tax refund to the tune of 532 billion rupees since 2014 to show higher tax collection growth.

Instead of forcing the FBR to blindly pursue the huge revenue targets, however unrealistic they are, there is a dire need for revamping the FBR and reforming the entire taxation system.

Unfortunately, scant attention has been given towards the reformation of the taxation system in the previous government and the current government seems to be following in the footsteps of its predecessors too.

The reformation of the FBR needs concrete steps to control unbridled corruption and making its officials and tax collectors more accountable. The tax collectors are often found arm-twisting the tax payers, forcing them to grease their palms.

Moreover, the FBR needs to be made an autonomous body free of any government interference. Strangely, the new chairman of the FBR has been tasked to achieve an ambitious revenue target, but his powers are clipped so that he cannot work independently. In fact, through behind-the-scenes pressures and coercion he has been reduced to a powerless officer.

Political interference in the working of FBR has been a consistent policy of successive governments, and it seems the situation remains the same under the present government despite Imran Khan’s commitment to the nation before coming into power that he would minimise political interference in the working of such important institutions.

The government is close to the half-way mark of its five year tenure, and pressure has been building both by the opposition as well as the people to show its performance.

By now, ideally, all mechanisms aimed at bringing about changes in reforming the sick institutions should have been in place. But until now, not much has been done to improve efficiency of the FBR and there seems to be no plan to do so in the near future.

The new chairman should be given free hand by the prime minister to run the FBR. He should be given very clear and realistic targets to achieve and then should be held accountable for any shortcoming or poor performance.

Right now, the pressure with regard to implementation of conditions attached with the International Monetary Fund (IMF) package like revenue target has been eased because of the Covid-19 situation, and this situation is likely to continue by the end of the current fiscal year.

However, the pressure is likely to rebound once the situation lurks back to normalcy. Irrespective of whether there is any pressure from outside or not, the government is required to undertake steps important for Pakistan’s own sake. The government has been successful in conveniently getting the budget passed from the parliament, but now it is required to get the targets set in it implemented. The government’s working will come under increasing scrutiny from its opponents in the coming weeks and months.

It can silence its critics only through its performance. Such a situation requires the government to redouble its efforts to improve its efficiency. The government leaders should know: Time is of the essence.

The writer is a senior journalist based in Islamabad