THERE has been severe criticism of the Federal Bureau of Revenue (FBR) in recent times for its failure to increase revenue and broaden the tax base. It has even been threatened with replacement by a new tax authority.
This harsh criticism from the government and some tax experts ignores how the FBR operates. The FBR is both a poorly financed and structured organisation. It may sound strange but the truth is that the FBR’s major wing, the IRS, is practically run by less than a 1,000 officers.
The FBR has three tiers. The first tier consists of grade 1 to grade 16 officials; second of grade 17 and 18 officers, and third of grade 19 to grade 22 officers.
The second tier officials are the pivot on which the FBR revolves. These officers hold vast jurisdictions in compared to equivalent officers in police and district management. But they do not have any financial authority to implement laws.
They cannot buy a pen or chair. They are not provided even a bicycle by the government to recover arrears from tax defaulters. They hardly have any human resources to perform their duties.
In comparison, the deputy commissioner of a district or a superintendent of police has a considerable financial budget and high-powered vehicles, vast human resources ranging from assistant commissioners to tehsildars and patwaris.
I had the opportunity to serve as IRS assistant commissioner in Hyderabad. I had vast jurisdiction comprising three tehsils — Qasimabad, Latifabad and Hyderabad. Four persons were managing this vast jurisdiction — I, my senile cardiac patient inspector, an upper division clerk and a peon. There were zero finances and no vehicle. It seemed the government sent me to war with a few bullets to fire without a gun.
Four officers are managing the broadening of the tax base in Karachi. These officers until recently had no office to work from. They do not have any financial authority, any vehicle or support staff to catch tax evaders.
Despite all this, the FBR collects taxes in a most efficient manner. The FBR collection cost is only 0.68 per cent of its total collection. In comparison, Malaysia has 1.4pc tax collection costs and South Africa 1.1pc cost. Singapore’s revenue collection agency gets expenditure at five per cent of tax collection.
Published in Dawn, April 14th, 2019