Is the FBR`s 5500 billion target achievable?
BY: SYED FAWAD ALI SHAH
The current government in its resolve to steer the nation towards economic viability and development on the basis of domestic revenue resources and debt servicing has set a target of Rs. 5500 billion for the Federal Board of Revenue in the current financial year. It is a herculean task for the FBR to achieve due to the inaction of the government to act decisively against the rampant corruption, incompetency of the bureaucracy within FBR on one hand and on the other hand the government`s failure to listen to the genuine demands of the FBR officers. An attempt is made to find the reasons due to which FBR is likely to miss its revenue target for the year in the following paragraphs.
⦁ Broadening of Tax Base:
Pakistan has the lowest tax to GDP ratio in the region. For the achievement of the revenue target for the current financial year improvement on this aspect cannot be hoodwinked. This aspect of taxation would require the following interventions;
⦁ Centralized structure:
There is a worldwide trend of public service delivery through decentralization and public service delivery at the doorstep. The Federal Board of Revenue in its last restructuring during the Musharraf regime centralized the tax machinery structure doing away with the offices in the peripheries. It made hurdles in facilitating the taxpayers at their doorsteps on one hand and on the other hand facilitated consultancy services rendered by the officials within the office premises at large scale on the other hand. The offices and infrastructure at the peripheries were made redundant. Recently an effort was made for revival of taxation services at the tehsil level for broadening of tax base, strengthening the enforcement and audits in addition to tax facilitation through the concept of district taxation offices with its sub offices at the tehsil level however, the funds required for the intervention were denied to FBR by babos in the Finance Division. They thought that construction of sewerage line, bricking the already cemented streets, repair of roads for non-tax compliant nation on borrowed money was important than provision of funds on emergency basis for the renovation and construction of tax offices at the district and tehsil level of Pakistan for initiating an effective drive for revenue collection and tax broadening.
⦁ Logistics:
It is one of the unattended issues due to which FBR is made prone to corruption. The per official space available in the field offices of the FBR is the smallest in the world and much less than the one prescribed by Public Works Department. The pace of work on the under construction infrastructure is slow. The field force can’t be operationalized full throttle due to acute shortage of offices, accommodations, vehicles, fuel etc. Misuse of monetization facility is very common and almost all BS 20 and above are in the possession of official vehicles in addition to the ones with the retired officers. The official accommodations available for the service at various stations are very few and in a pathetic state. An officer with family has to live in a portion of a rented house or in a room alone to meet both ends meet. In short, it would be the availability of the required logistics to the FBR that would serve as a key factor for broadening of tax base in addition to achievement of assigned revenue target.
⦁ Tax officer to population ratio:
The tax officer to population ratio in Pakistan is very low in the region. The government is generous to sanction posts in the hierarchy of the general cadres of the bureaucracy but not willing to sanction adequate posts in various grades of the IRS for effective broadening of tax base and achievement of the herculean assigned revenue target. The dream of the effective taxation at tehsil level would materialize only if the tax officer to population ratio is improved enabling FBR to identify potential taxable activities at the tehsil level for broadening of tax base and collection of taxes.
⦁ Quality of Work:
The human resource in the organization would be able to deliver if they are working under refined supervisory officer who polishes and appreciates the skills of the workforce developed and applied for the achievement of the assigned targets. The achievement of the assigned revenue target of Rs. 5500 billion would require the government to consider this aspect of the organization.
⦁ Corpses without coffins:
It is a very unfortunate state of affairs that most of the officers elevated to BS 22 in the IRS are dead wood who have no interest in the affairs of the service. They bother about nothing except their retirement benefits and post retirement opportunities. The field officers have coined the word corpses without coffins for them as their contribution to improvement of the working conditions, welfare of the organization is nonexistent. Doubts arise on the sanctity of the high powered boards and the i-reports on the basis of which these officers are elevated.
⦁ Rampant corruption:
Mere threats from the government without decisive action has added to the courage of the incorrigible and the corrupt in the Federal Board of revenue. Their motive is to earn more for securing their future. Achievement of the assigned revenue target for the year would be a mirage if this aspect of the tax machinery is not checked.
⦁ Rampant consultancy:
The Federal Board of Revenue recently issued a circular imposing a ban on consultancy services rendered by its human resource. It also transferred staff in Karachi, Lahore, Islamabad, Rawalpindi which ceased the clientage of the officials posted in these stations. It has been learnt that the head of the organization is under immense pressure from various sources for the reversal of the orders in addition to not issuing further posting transfer posting orders to curb this menace of consultancy. The transfer posting orders made in this context in small stations were cosmetic.
⦁ Quality of human resource:
The human resource employed for the achievement of the assigned revenue target needs to be in high spirit. It would be possible if they are rewarded for their contribution to the service and the objective of the organization. The achievement of the assigned revenue target of Rs. 5500 Billion would remain a myth if this aspect of the workforce is ignored.
⦁ Lowest paid human resource:
The World Bank in its reforms project of the FBR recommended three basic pays for the human resource posted in the field formations for controlling corruption and promoting efficiency. The government restricted this recommendation to double basic pay and it continued for some time. This additional basic pay was freezed in the previous regime killing the purpose for which it was introduced. Most of the human resource posted in FBR are highly skilled and the remuneration they receive at the moment is the least in the region. Ironically the baboos in the provincial bureaucracy were incentivized with Executive allowance equivalent to one and half times of their basic pay who are spending specialists. Many talented officers are leaving the pool of corruption created by the government for a clean and better future abroad. The assigned revenue target of Rs. 5500 billion could be achieved only if the workforce is incentivized by introducing a special pay package for the human resource of the service.
⦁ Promotion path:
One demoralizing factor for the officers posted in the service is the absence of their promotion path. In pursuance of the Musharraf regime reforms officers were inducted in the Inland Revenue Service in bulk without taking their promotion path into consideration. This aspect could be a possible reason for the brain drain of the organization who see better future outside the organization or the country. Moral of the human resource posted in the organization could be improved through provision of a decent career path to the officers of the Inland Revenue Service for the achievement of the assigned Rs. 5500 billion.
The gist of the discussion above is that the assigned revenue target of Rs. 5500 is achievable if the above points are considered and redressed on emergency basis enabling the plagued organization to work effectively for the construction of Naya Pakistan as envisioned by the Premier.
The writer is a Pakistani journalist currently based in Malaysia.
He can be reached at pmpk55@hotmail.com