ISLAMABAD: Rejecting outright the status of autonomous body for the FBR as recommended by the Institutional Reforms body led by Dr Ishrat Husain, the FBR’s officers have extended support to retain the status of tax collection machinery as department of the federal government.
The FBR officers also proposed that the re-structured tax authority after inclusion of provincial taxes may be appropriately named ‘Pakistan Revenue Board’ instead of Pakistan Revenue Authority.
Official documents and background interviews have disclosed to The News that the Institutional Reform Cell of Prime Minister Office presented in its report on “Reorganizing the Federal Government” proposed the FBR as an autonomous body.
The Cabinet has already approved the recommendations of The Institutional Reform Cell of Prime Minister Office, presented in its report on “Reorganizing the Federal Government” (hereinafter referred to as task force report). Para 5 of the Executive Summary states that Cabinet approved the recommendations in its meeting held on July 09, 2019.
As such the Cabinet has not approved abolishing FBR and replacing it with Pakistan Revenue Authority. However, FBR is included in Annex 8 of the report “Table 8- Proposed Autonomous Bodies”. It is pointed out that the reorganization efforts are underway at multiple levels which are interlinked.
Now the FBR has been placed in the list of autonomous bodies in said report. This segment should be removed initially to place 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 FBR as Semi-Autonomous Revenue Authority.
In this backdrop, Para f of the proposed plan of restructuring of FBR as envisaged in the minutes of the meeting held on 3rd October, 2019 outlines the establishment of Pakistan Revenue Authority as an autonomous body. After detailed dialogue, stakeholder input has been sought from consultative committees. The ToRs of the Consultative Committees formed for proposing the future status of the tax authority provides three options as under:
a) Attached Department under the Federal Government
b) Semi- autonomous body
c) Autonomous Body
The Islamabad Committee feels that FBR should retain the status as an attached department of Federal Government and should continue to operate in the ambit of Civil Services.
Globally the function of tax collection is a state function, which cannot be delegated to an autonomous bodies’ hence African region has a semi- autonomous structure in place.
The FBR must be differentiated from the State Bank of Pakistan, which is a regulatory authority. It should also be distinguished from SECP and other such autonomous entities; it is primarily due to the fact that the revenue authority applies the quasi- judicial powers under the Criminal Procedures Code and performs the prosecution functions as well; which requires the writ and enforcement drive of Federal Government at its support. As the levy and collection of taxes is hardly possible without the authority of Federal Government, the reduction of tax administration to a revenue authority, will ultimately lead to diminishing taxpayers compliance, increased malpractices and decrease in revenue collection.
Therefore, it is strongly recommended that the status of the future tax administration be maintained as an attached department and career progression of the IRS cadre officers should not be compromised by lateral entry of professionals at any stage; however, as there is a growing need for sectoral analysis and legal experts in the tax administration, the Chief Commissioners at the level of Regional Tax Offices may hire the services of the professionals for assistance in tax assessments as support staff required at unit level.
In the above context, it is proposed that the re-structured tax authority after inclusion of provincial taxes may be appropriately named ‘Pakistan revenue Board’, (PRB) instead of Pakistan Revenue Authority (PRA), as it will create an anomaly, considering that the term “authority” will be a misnomer for an organization working as an attached department under the ambit of Civil services.
Existing constitutionally empowered attached body with specific structural features to perform duties on functional lines.
PRB to have a separate Tax policy coordination wing with prime functions to formulate operational level policies and to inculcate Policy recommendation of Tax Policy Board and its Board members. Tax Policy Board to be placed at MoF(Revenue Division).
In the light of the above, this Committee is of the view that existing status of FBR as an attached department of the Federal Government should be retained and necessary amendments may be made to make it more vibrant, efficient and effective organization. This Committee is also of the view that FBR name should only be changed to Pakistan Revenue Board to accommodate provincial taxes that have to be later brought into its ambit.