Loot in the name of reforms remains unchecked

ISLAMABAD: The huge amount of over US$129 million dollars, which was spent in the name of tax reforms during the last decade, has gone down the drain with the tax-to-GDP ratio showing a decline instead of an improvement besides the ‘reforms’ being reversed one after the other.
While another set of tax reforms is being prepared and implemented demanding more funds from the public kitty, there is no appraisal of what went wrong with the past reforms and who was responsible for the waste of the huge government funding.
FBR sources told The News that millions were paid in the name of reforms to consultants and experts, salaries of all FBR officials were doubled, revenue services were given more and more positions in the name of restructuring but the real aim of improving the tax-to-GDP ratio by expanding the tax base was never achieved.
Everything connected with these reforms for the financial and service benefits of the FBR officials was adopted and implemented but the much-needed weeding out of dead wood, the slashing of bloated bureaucracy, minimising of direct interaction between the taxman and taxpayer, etc, were overlooked or, if adopted, later changed.
The sources said that the most serious problem with the reforms has been the missing political will to make the FBR an independent body where it could be allowed to go after the influential tax evaders, including those holding key positions in the government without any fear or favour.
Over a decade back, a former World Bank official was engaged to prepare an FBR Reforms Plan for whose implementation the IMF, WB and DFID contributed a sum of US$129 million. The said reforms package led to the restructuring of the revenue services with income tax, sales tax and excise having merged to become the Inland Revenue Service, leaving the Customs Service to focus on customs-related taxes alone.
The old system of territorial jurisdiction for income tax was replaced by introducing functional jurisdictions regarding audit, enforcement and legal. It was committed to reduce the size of the revenue bureaucracy drastically by slashing the dead wood and introducing a huge IT-based personnel management.
It was done apparently to improve the collection of direct taxes and minimise the direct interaction between the taxpayers and taxmen. The sources said that thousands of officials were supposed to be removed but it was not done. Additionally, the FBR started moving back to the zone and circle system of territorial jurisdiction. It is said that the complete reversal towards the territorial jurisdiction may be seen in the near future.
As part of the same reforms, customs clearance system was created by a foreign company and a pilot project was also launched but it could not be rolled out. Consequently, the FBR’s own subsidiary — PRAL — was asked to design and implement web-based customs clearance system.
In the area of human resource reforms though neither the dead wood was removed nor the IT-related reforms were fully implemented, the salaries of all the FBR officials were doubled. To a selected lot, market-based salaries were also offered.
Practically, reforms were introduced half-heartedly and in bits and pieces, which only blurred the actual aim of collecting more taxes instead of reducing the tax-to-GDP ratio.