In its latest attempt to speed up the completion process of inquiry reports on tax evasions, the Federal Board of Revenue (FBR) has launched an incentive scheme for its officers. According to the new system, FBR officials and/or officers tasked with an inquiry will be awarded two basic salaries upon completion of the report within 60 days of being commissioned to them; one basic salary upon submission of report within 75 days; and half basic salary for handing over the report within 30 days. The law enforcement agency has in the past been lauded by Prime Minister Imran Khan for surpassing its targeted revenue collection. In October, the FBR achieved a tax collection of Rs1,840 billion, which was 37 percent higher than last year. Along with the incentive scheme, it has also recently intensified its offsite and onsite inspection in line with the Financial Action Task Force (FATF) requirements of implementing anti-money laundering and counter finance terrorism regime. But will these attempts bear fruit?
While incentivizing employees do work and ensures efficiency, the problem is that the FBR is marred with bureaucratic hurdles. This is evident by fact that the tax collecting agency works in four tiers with the first consisting of many individuals who are mostly unskilled and redundant. While the tier two members have quasi-judicial and executive powers, tier three employees have little to no financial powers. How does the FBR then envision to have speedy completion of reports when an inquiry is going to go through the cumbersome process of four different tiers? More importantly, if past experience is any guide, the FBR is also not technologically advanced, which could otherwise have helped officials in filing inquiry reports in time. The unsatisfactory response of the former chairman Asim Ahmed following the cyberattacks on taxpayers’ data in August had exposed the agencies’ lack of understanding on matters of technology.
What the FBR direly needs are new reforms to help it in expanding Pakistan’s tax net. It must be noted that the country’s tax-to-GDP ratio stands at around mere 10 percent, making it one of the lowest in the region and in the world. Moreover, inquiry reports pertaining to Pakistan’s elites, who are the ones avoiding tax payments and enjoying exemptions, are often delayed intentionally. With its new incentive scheme, is the FBR also empowering its officers to probe against the rich?