The unexpected appointment of Shabbar Zaidi was announced at a time when FBR officials were getting ready to resist expected appointment of Mujtaba Memon. The senior officers’ efforts to approach the PM to reconsider his decision went in vain.
This resistance was expected because a ‘client’ of the organization was set to be its boss. Of course, he was aware of ‘beneficiary side’ perspective and issues but the deep rooted ‘systemic challenges’ were best kept internal secret of FBR. The FBR collective accepted the appointment with a pinch of expectation that it can be a win-win. How? If a critic becomes a boss then it’s an image makeover; and that he will introduce palatable solutions for increased revenue collection from big fish. Unfortunately, either didn’t work.
He offered welcome ‘relaxations’ to corporate sector than other way around. His first ‘diagnosis’ (which was already diagnosed ages ago) was that small traders and shopkeepers carry out substantial undocumented business transaction and are out of tax net. FBR imposed 17% sales tax on export sectors and mandatory condition of CNIC for unregistered buyers. To date, tax return date has been extended nth time; tax filing format is still to be finalised and CNIC condition is yet to be implemented.
Expanding the tax base and increasing tax revenue was another target area. Increase in number of tax filers was promoted as increase in number of tax payers. The Senate Standing Committee on Finance Revenue and Economic Affairs was told that that the number of taxpayers for the financial year 2019-2020 have increased by 65.2%, in comparison to last year. These were actually 888,748 new tax filers which in actual did not result in 65% increase in tax collection/ revenue. It was mostly those salaried people whose tax was being deducted at source but they were not will-full filers. The political crowd cheered and IMF tax revenue target setting asked for ambitious ‘to do more’.
Reforming FBR required sustained leadership but it was handled with adhocism. Enforcement of deadline remained as weary. Extensions in filling of tax return date set a new record, for the fiscal year 2018-2019 closed in August 2019. For the fiscal year 2019-2020, it has thrice been extended with current being the end of February. Policy based reforms could not create desired stir except that corporate business houses were facilitated. To quote a few – tax officers were stopped from raiding anyone without approval of the Chairperson FBR; the ‘in-person’ interface between the tax payer and collector was barred except through IRIS.
Low usage of the IRIS was conveniently ignored, hence notices sent via IRIS went unattended; tax officers sat back; cases landed in Tribunals and IRIS notices could not hold legal ground. Using students from prestigious universities like LUMS as FBR’s person interface tax was also an innovative solution that could not see light of the day. Last in line key was proposal to turn FBR into the Pakistan Revenue Authority (PRA) that would primarily be automated; and anticipated to turn approximately half of 22000 Inland Revenue Service (IRS) staff redundant.
Leading an organisation whose second name is stress was bound to create personal and professional stress for the incumbent chair and it did. The point is that systemic governance reform can neither be introduced in an equation where all things remain the same; nor in piece meal. It requires a business mode.