ISLAMABAD: While the focus of the media had remained glued to the talks between the government and realtors for increased property valuation to yield Rs60-70 billion additional revenues over the past one month, the Federal Board of Revenue (FBR) — which represented the government in the talks — was negotiating with the government behind the scene a special financial package for itself.

As a result, the federal government has granted yet another special allowance to the entire workforce of the FBR across the country with a perpetual financial impact of Rs3-5 billion per annum with retrospective effect from July 1, 2015.

A senior FBR official told Dawn in a notification, the government has conveyed “the sanction of the president of Pakistan for grant of an allowance titled ‘Fixed FBR Incentive’ with effect from July 1, 2015 to all the employees in BPS 1-22 of FBR headquarter and its field office on monthly basis”.

The fixed allowance begins with a Rs1,500 per month to employees of Grade-1 and goes up gradually to Rs5,400 per month to Grade-14 employees. The rate of fixed allowance for BPS-17 officers has been set at Rs7,000 per month and then goes up to Rs12,000 per month for BPS-22 officers.

The official said the significance of the new allowance could be gauged from the fact that a totally new expenditure head has been created.

An official of the Ministry of Finance said that the Finance Division had been resisting the special allowance for more than a year because the FBR was already getting a series of special allowances and another such facility to FBR staff could open up floodgates of similar demands from other influential institutions.

But, Tariq Pasha, the principal staff officer of the finance minister who hailed from the revenue service and is drawing ad hoc benefits of Grade-22, convinced Finance Minister Ishaq Dar for an additional benefit for the FBR employees, he added.

The official said this was on top of 5-6 honoraria provided to officials of the FBR and a select wing of the finance ministry on the eve of federal budgets every year. Under a World Bank-funded project, FBR employees were also drawing special performance allowance equivalent to a basic salary.

Interestingly, the finance ministry had frozen special allowances to a series of institutions, including employees working with the president and prime minister offices, high courts, the Supreme Court of Pakistan, armed forces and various ombudsmen offices, at the level of 2011 on the grounds of fiscal limitations.

Officials said the FBR had made many attempts over the past one year to force the government to lift the freeze on its allowance, but was rejected by the Finance Division.

The Finance Division was of the view that achievement of a revenue target for one year should not be a reason for a special incentive package forever because the revenue target was achieved through automatic revenue measures like withholding taxes, increased sales taxes and repeated mini-budgets under the IMF pressure and not through field efforts of the revenue staff who could have brought traders under the tax net.

“If meeting revenue target be treated as a standard for permanent financial benefit the failure to meet targets should also be used to curtail financial benefits forever as a punishment,” the finance ministry’s official argued.

Published in Dawn, August 3rd, 2016