Govt perturbs bureaucracy by appointing new FBR chairman

LAHORE: The recent decision of the federal government to change the Federal Board of Revenue (FBR) chairman for the seventh time during the PTI-led government has perturbed the bureaucracy in Pakistan, BOL News learnt on Wednesday.

A senior bureaucrat told BOL News that the government should have appointed Dr Muhammad Ashfaq Ahmad, a Grade-21 officer, four months ago rather than appointing Member IT Asim Ahmed on April 9. Such an unprofessional behaviour is not beneficial for the important department such as FBR, the bureaucrat said.

“Dr Muhammad Ashfaq, is a very honest and upright officer without a shred of doubt, but this is no way to deal with [the] things [and] they [the government] should have appointed him earlier in place of Asim Ahmed and [if] Asim Ahmed was appointed [then] he should have been given the time to deliver,” another senior bureaucrat told BOL News.

Lahore Chamber of Commerce and Industry’s FBR executive committee member Malik Naeem Khan told BOL News that he is shocked to see the seventh FBR chairman in the last three years. “Asim Ahmed was a brilliant officer who had a good liaison with the business community. We are shocked to see this move by the Federal Cabinet to replace him,” he added.

Asim should have been given at least two years so that he could implement things at the revenue board.

What does the new FBR chairman needs to do?

Talking to BOL News, Dr Ikramul Haq, one of the leading tax consultants in Pakistan said that on August 25, 2021, Muhammad Ashfaq Ahmad, a junior but highly competent officer of the Internal Revenue Service (IRS) in Grade-21 assumed the charge of the Federal Board of Revenue (FBR) chairman. The appointment of the chairman, ignoring 24 senior officers, may attract criticism from some quarters.

“However, it should not be ignored that his performance as the Member Tax Operations (IRS) and with dual charge of the Director General of International Taxes has been extraordinary. The seniority principle cannot be rigidly applied after the saga of hacking of the FBR’s data,” Dr Haq said.

The leading tax consultant said the people are convinced that for them mere change of chairman at the FBR does not matter unless the tax system is reformed to help growth and generate the revenues as per the real potential, which is not less than Rs8 trillion.

They said the new captain of the FBR will also not stop field formations from arbitrary taxation and negative tactics to squeeze the existing taxpayers as was done in the past by his predecessors.

He has to meet the target of Rs5.8 trillion set for the current fiscal year under the programme of the International Monetary Fund.

For Dr Ikramul Haq, the FBR has failed to meet original tax targets for the last three years of the present government of the Pakistan Tehreek-e-Insaf (PTI). It is a fact that nearly 55 per cent taxes are collected, at source. The IRS own efforts in collecting taxes from underreporting and non-reporting are hardly in between 6 per cent to 8 per cent even before the Covid-19.

“Further, refunds of over Rs600 billion are due and if these are deducted, the net increase in the collection since June 2017 will be negligible. The blame for blocked refund lied with [the] last government of Pakistan Muslim League (Nawaz),” he said.

Therefore, unless some fundamental changes are made the story of early years will be repeated. The position; however, can change if comprehensive reforms are made.

Dr Ikramul Haq said that it is unfortunate that the revenue board has become an institution for appeasing the political masters and destroying the business climate. It is an incontrovertible fact that for showing higher tax collections, the FBR is not clearing refunds and creating unlawfully recovering disputed tax demands even before receipt of final orders from an independent appellate forum.

“[The] major tax collection responsibility had already been shifted on the shoulders of the withholding agents. The sectors contributing to the economy have been facing a cash crunch due to the FBR’s excessive collection of demand in advance,” he said.

Agreeing with him, Huzaima Bukhari another tax consultant, told BOL News that it is a matter of record that the appointments of FBR chairman during the last many years, from Sohail Ahmad to Salman Siddique to Mumtaz Haider Rizvi to Ali Arshad Hakeem to Ansar Javed to Tariq Bajwa to Nisar Khan to Dr Irshad to Tariq Mahmood Pasha to Rukhsana Yasmeen to Mohammad Jehenzeb Khan to Syed Muhammad Shabbar Zaidi to Nausheen Javaid Amjad to Muhammad Javed Ghani to Asim Ahmad, have only rendered things from bad to worse.

“Cronyism and corruption reign supreme in [the] FBR and now it has lost credibility in totality after a cyber-attack on August 12, 2021, it took 72 hours to recover from this entrapment,” she said.

Huzaima added that it is; thus, not surprising that the FBR has earned notoriety in all areas: from cyber-security to misreporting of figures to bungling of funds, from corruption to highhandedness and from inefficiency to worthlessness. Time and again, various FBR chairmen have admitted before the Standing Committees on Finance and Revenue that the tax reforms had miserably failed.

She said on November 10, 2015, the then FBR chairman Tariq Bajwa admitted before the Senate Standing Committee that the revenue board to issue all refunds had either to impose more taxes or the government would have to issue bonds. Since his days, huge refunds have piled up and the finance minister is not ready to pay all these at one go to show higher collection.

Adding insult to injury, the special assistant to the prime minister on revenue keeps on accusing the businessmen of evading billions every year by under-reporting, submitting incorrect declarations, etc, but takes no action! He never explains how tax evasion is possible without the connivance of the tax collectors.

Huzaima said that unfortunately, no action has ever been taken against the FBR’s high-ups for causing losses of billions of rupees every year to the national exchequer, the case of “missing containers mafia” proves it beyond any doubt.

It is strange that the Standing Committees on Finance and Revenue of the National Assembly and Senate have also never recommended removal and punishment of the FBR’s top notches even after established cases of corruption, over-stating of collection figures, making false statements and misleading elected members and the entire nation.

She said the provincial governments are also guilty of protecting the rich and mighty by not collecting tax on “agricultural income” as per the prevailing laws. The rich and mighty in Pakistan do not file tax returns but the FBR issues notices to filers alone! It has failed to tap at least 20 million income tax filers.

From 2003 to 2020, the FBR and the provincial tax agencies have miserably failed to improve the voluntary tax compliance through a strong deterrence system.

“[The] tax culture will never improve unless deterrence is created along with [the] assurance to people that [the] taxpayers’ money is actually being spent for [the] public welfare,” she added.

Agreeing with Huzaima, Dr Ikramul Haq said that there is a need to dismantle the existing oppressive tax system and reconstruct it to restore public confidence in the state.

“But even a good tax system will not work if the machinery to run it is incompetent, corrupt and inefficient. The biggest challenge before the new [FBR] chairman is to work on making [the] FBR an efficient tax authority,” he said.

It is high time that the FBR stops harassing the compliant taxpayers and protecting the cheat. It should have zero tolerance for non-filers and tax evaders. The tax policies should encourage investment, especially for all those who generate more goods and services, leading to greater employment opportunities. A higher economic growth will automatically increase taxes.

“As elaborated above, the challenges before the new chairman are enormous, the most daunting one is how to undo the ugly legacy of cronyism, favouritism, nepotism and mediocrity. Will he be able to rise to the occasion? Only time will tell,” he added.