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August 6, 2020

FBR top guns reject proposed reforms

Islamabad

August 6, 2020

Islamabad : The FBR’s top hierarchy has rejected the proposed reforms introduced by Dr Ishrat Hussain-led Institutional Reforms Body and proposed its own roadmap for undertaking minor but substantial changes having a far-reaching impact on revenue generation.

In background discussions with the FBR’s top guns on Tuesday, they rejected the proposed reforms introduced through the PM Office letter written in October last year where the FBR’s structure was proposed to be autonomous putting it outside the control of the government.

However, the tax machinery rejected these reforms in totality and raised one fundamental question that how much tax revenues would go up after implementing these reforms.

If there is no clear cut response, then any such reforms would have no benefits to pursue vigorously, they argued.

They took stance that one monogram structure on papers by increasing or reducing the numbers of FBR’s Members could not bring reforms in the tax machinery, as it required a much deeper analysis and then fixation of problems and finally coming up with solutions. According to a presentation given to PM Imran Khan, the FBR high-ups claimed that if all corporate tax cases were brought from the Regional Taxpayer Offices (RTOs) to Large Taxpayer Units (LTUs), it could result into yielding additional tax revenues of Rs353 billion in one go.

“We have proposed minor but substantial changes for generating more tax revenues,” said the FBR official and added that the tax machinery would come up with a simplified tax return this year in order to expand narrowed tax base. Efforts will be made where there will be increase in deadline of filing of income tax returns this year,” added the official.

In order to protect privileges of the FBR employees while keeping the tax machinery within the fold of public sector, the Ministry of Law has been consulted to assure the privileges of FBR officials remained intact after granting autonomy such as on the pattern of State Bank of Pakistan.

On the issue of autonomy, the FBR officials had already rejected the proposal and told to retain the current status of tax collection machinery as a federal government department. The FBR officers had proposed that the re-structured tax authority after inclusion of provincial taxes might be appropriately named ‘Pakistan Revenue Board’ instead of Pakistan Revenue Authority.

The cabinet had approved the recommendations of the Institutional Reform Cell of Prime Minister’s Office, presented in its report on “Reorganising the federal government,” hereinafter, referred to as task force report. Though the cabinet did not approve abolishing the FBR and replacing it with the Pakistan Revenue Authority, the FBR was placed in the list of autonomous bodies in the report. This segment should be removed initially to place the FBR as an executive department.

There is a divergent opinion stated by the World Bank, as the World Bank project report “Pakistan raises revenue” also envisages the FBR as a semi-autonomous revenue authority. In this backdrop, the Para-F of the proposed plan of restructuring of FBR as envisaged in the minutes of the meeting held on October 3, 2019, outlined the establishment of the Pakistan Revenue Authority as an autonomous body. After detailed dialogues, the stakeholder input was sought from consultative committees.