October 21, 2001	Sunday	Shaba'an 3, 1422

ISLAMABAD, Oct 20: The International Monetary Fund (IMF) has recommended to the government for setting up a national large taxpayer office to improve administrative control over the taxpayers.

Official sources told Dawn here on Saturday that in this connection the Fund has proposed the creation of two model offices in 2002—one for large taxpayers and the other for non-large taxpayers.

These model offices would be structured on a fully functional basis, and would incorporate new work environments/layouts, that could be used to test the concepts being recommended and to generally demonstrate to officials the new approaches being proposed, the sources said.

According to report of the IMF recommendations for organizational reforms of tax administration, the copy of which was available with Dawn, a new agency should be created for tax and customs administration, with increased powers, which would be structured largely on a ‘functional’ basis.

Under the new system, the Fund proposed integration of tax units, which means that the administration of the sales tax would be incorporated into direct taxes.

The Fund observed in its report that the ‘type of tax’ organizational structure for domestic taxes administration was outmoded and penalty inefficient; income tax assessment processes are based on out dated concepts, poorly organized, labour intensive and open to abuse.

It was further pointed out that the use of information technology (IT), particularly for income tax administration, was highly inefficient, there was a lack of any real effort to assist taxpayers comply with their obligations, and audit and other enforcement activities were weak.

Moreover, the IMF mission in its report observed, as noted by the task force on re-structuring tax administration and observed by the IMF mission, working condition, staff remuneration, office accommodation and training in tax related topics were well below the standards required of a reasonably effective and efficient tax and customs administration. Not surprisingly, as reported by task-force of Syed Shahid Hussain, overall administration was burdened with endemic corruption.

With these in background, the Fund recommended the creation of dedicated taxpayer service and audit functions, targeted initiatives to improve taxpayers’ record keeping and refinements to the dispute resolution process and the system of sales tax refunds to exporters.

In relation to the customs administration, the mission however, recommended that officials should closely study modern customs processes and supporting system of automation, in advance of a major re-engineering of these processes in the country.

To address the existing weaknesses concerning human resource management (HRM) in the tax administration, the IMF recommended the appointment of senior executives to lead national HRM and IT functions; the development of comprehensive HR, IT and accommodation replacement/refurbishment plan; revision to recruitment policy to place emphasis on appropriate technical qualifications and job suitability; enhanced remuneration via a special allowance linked to the implementation of modernization initiatives; major changes to the system of individual training; increased investment of funds to acquire far greater technology, higher standard accommodation and to generally enhance the office working environment for staff and taxpayers and specific initiatives to improve the integrity of tax officials.

The Fund recommended that under current arrangements, the CBR must recruit its staff from a graduate pool that was tested and ranked by the public service commissions principally by level of intelligence, with virtually no regard for technical qualifications and the aptitude needed for a technical staff official.