Reform and restructuring of FBR is once again in the news. According to a report, the Bureau has constituted a high-level committee to determine the core functions of the Directorate General of Intelligence and Investigation Inland Revenue and Directorate General of Internal Audit to avert overlapping of functions and organisational restructuring of the agency. At a recently held meeting of the Board-in-Council, FBR chief Tariq Bajwa suggested that since a separate system is operating for broadening the tax base under Commissioner, BTB FBR (HQ), which focuses on individuals rather than businesses and organizations, it may be in the fitness of things that the businesses, not in tax net, may be made the responsibility of the Directorate General Intelligence & Investigation and Inland Revenue (I&I-IR) for the purposes of comprehensive survey and identification. The FBR Chairman also emphasised that the core functions of the Directorate General (I&I-IR) should be specific, clear, categorical and without any overlapping/duplication with other organisations.
On the other hand, the one-member Commission on ‘smuggling of arms and ammunition’ has strongly recommended restoration of the old organisational structure of FBR under which separate Members for Customs, Sales Tax, Federal Excise, Income Tax and Withholding Tax were independently dealing with all the federal taxes.
The issue of reforming FBR keeps hitting the headlines because despite repeated efforts the Bureau has not been able to push up the abysmally low tax-t-GDP ratio in the country. It may be recalled here that during 2004-2010 under the Tax Administration Reforms Project (TARP) an attempt was made to re-organise and re-structure FBR and its field formations. But the project failed to deliver as the target of raising the tax-to-GDP ratio to 15 percent could not be achieved. Rather, the situation has worsened over the years.
Reform in FBR is needed both at the policy/strategy and operational levels. There is often duplication of work and many grey areas which militates against efficiency and optimal results. The Committee set up by the Board-in-Council needs to carry out a detailed scrutiny of the tax administration and organisational structure of the FBR. There is an obvious need to shed the flab, where necessary, and strengthen the wings/sections which can be more productive of results.
The objective of broadening the tax base cannot be achieved without tying up all the loose ends the most important of which is the performance of the field staff. Corruption is rampant at various levels which needs to be dealt with an iron hand. We need to evolve a new tax policy keeping in view the ground realities.