Choice for top taxman

Published June 26, 2017

The critical post of the head of the country’s revenue collection body — the chairman of the Federal Board of Revenue — is up for grabs again.

It falls vacant on June 30 when a brief month post-retirement extension to the incumbent FBR chairman comes to an end.

The post of chairman FBR is central to the national economy, not only because he leads an agency

responsible for collection of more than 93pc of total tax revenue and 85pc of total federal resources, but also because the FBR’s performance sets the stage for investment and economic growth.

The government faces a choice of new incumbents to fill the position. The selection is also important for the ongoing investigations into allegations of money laundering against the Sharif family.

As happens normally, officers of three service groups — the Pakistan Customs Service, Inland Revenue Service and Pakistan Administrative Service, are in the run to capture the top slot of the county’s revenue administration.

An FBR chief hailing from diverse service groups tends to influence the FBR’s culture, human resource development and revenue performance.

A chief from the Pakistan Customs Service brings with him two disintegrative forces which run parallel and may imperceptibly tear apart the FBR’s organisational fabric.

The post of chairman FBR is central to the national economy … because the FBR’s performance sets the stage for investment and economic growth

Soon after his elevation as FBR chief, an officer of the Pakistan Customs Service divides the human resource on the FBR’s Custom side into friends and foes.

Irrespective of competence and performance, a customs service officer immediately begins to reward his entrenched friends and to punish his deep seated rivals in the Customs department.

An FBR chief from the Customs Service spurs traditional rivalry and antagonism between the Inland Revenue service and customs. Being in numerical majority, the Inland Revenue service employees deem it fair that someone from their service should rise to the highest office.

When a customs official becomes the FBR chief instead, he faces the silent and sometimes open resistance in the Inland Revenue service.

Adopting a defensive posture he prefers not to press hard on the Inland Revenue service for efficiency and performance. Instead he spends his energies in adopting a reconciliatory and defensive position in order to protect and prolong his tenure.

A customs officer as FBR chief knows very little of Inland Revenue Service laws and organisational dynamics.

While direct taxation offers the main scope for tax network expansion and revenue collection in the country, a customs official succumbs to his weaknesses which increase the probability of his failing to realise revenue potential.

In contrast, the Inland Revenue Service (IRS) is a relatively more cohesive service group. When an IRS officer heads the FBR, he is less likely to create fragmentation within his service group. Being a member of a majority service group under the FBR, he doesn’t feel insecure.

But still an Inland Revenue Service officer is not a complete blessing for the FBR. Knowing little about custom laws, he prefers not to interfere much in the customs organisation. He normally maintains the status quo within the Inland Revenue Service.

If past track record is any clue, an IRS officer doesn’t question and check the pervasive operational inefficiencies in the IRS. He maintains relative cohesion in the revenue administration, although plagued with inefficiencies and wastage of resources.

Unlike the officers of the revenue services, an officer of the Pakistan Administrative Service (PAS) stands a relatively much better chance of running the revenue administration smoothly and cleansing it of inefficiencies and corruption.

Being an outsider and a neutral player, he doesn’t have intimacies in the revenue administration to totally ignore systemic corruption. However, when a PAS officer heads the FBR, corruption and inefficiencies do prevail in the revenue administration but due to different reasons.

One reason is that a PAS officer tends to close all communication channels with other than his immediate subordinates and relies exclusively on FBR members from revenue services.

These members have their own network of friends and supporters in their respective service groups. The effect is alarming. All the advantages with a PAS officer disappear.

A PAS officer heads the FBR but actually members of the revenue services run the show. Inefficiencies and corruption pervade the revenue administration. This makes the tenure of a PAS officer no different from that of revenue service officers.

However, a PAS officer stands a much better chance of capitalising on his unique advantages and harnessing his weaknesses. He does not have to do much for the purpose.

Like successful CEOs, he has to keep himself accessible to the voice of FBR workforce. He has to open his communication channels with the FBR workforce.

Published in Dawn, The Business and Finance Weekly, June 26th, 2017

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