Fiscal anaemia

09 Jul 2020

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The writer is an author.
The writer is an author.

WHAT could be more disheartening for the new chairperson of the Federal Board of Revenue Muhammad Javaid Ghani than to encounter, on his way in, the tombstones of three of his predecessors? All three had been disposed of within two years.

It is said lightning never strikes thrice. Yet out of all the senior posts in the federal government, the top job in the FBR seems particularly accident-prone. Run down the list of former chairpersons over the past 50 years, since 1971. You will find unusually high casualties.

Between 1971 and 1975, there were three. Another three (N.M. Qureshi, 1975-80; Fazlur Rahman Khan, 1980-85; I.A. Imtiazi, 1985-1988) survived longer — a total of 13 years. However, between May 2009 and July 2020 (a period of just over 11 years), the FBR chair has seated 13 incumbents — an average of just under one every fiscal year. Two women amongst them received shorter shrift. Ms Rukhsana Yasmin lasted one month in 2018, and Ms Nausheen Javaid Amjad, inducted in April this year, was ushered out by July.

The first of the four appointed by the present coalition government was Syed Shabbar Zaidi, a senior chartered accountant. Some years before his selection, he had articulated his views in an article he wrote for Dawn in 2015. In it, he held “taxes are the price of civilisation. There can be no state, and no rule of law, without proper revenue mobilisation. And revenues do not come walking through the door of the tax authorities”. FBR chairpersons do, and are then expelled through its revolving doors.

It is hardly surprising that the FBR has found it difficult to sustain its lofty vision.

Mr Zaidi lasted exactly one year in office. He might have stayed longer, had he learned to dance like his chartered accountant predecessor Abdullah Yusuf. Mr Yusuf felt no shame prancing before an official audience in Islamabad, applauded by president general Pervez Musharraf and prime minister Shaukat Aziz. Had they presence of mind, they would have realised that their mis-gendered mujra was being transmitted live across social media. It is now the more shameful part of FBR folklore.

With such a high rate of turnover in its chairpersons, it is hardly surprising that the FBR has found it difficult to sustain its lofty vision, leave alone fulfil its mission — “to enhance the capability of the tax system to collect due taxes through application of modern techniques, providing taxpayer assistance and by creating a motivated, satisfied, dedicated and professional workforce”.

Each year, the government looks to the FBR to collect taxes for funding and then, disappointed by descending targets and insufficient revenues, it severs the FBR’s head to cure its own migraine. FBR’s sticky-fingered collection system remains untreatable.

The FBR, to demonstrate its earnestness, routinely publishes data on the increasing number of taxpayers it has garnered. In March 2020, for example, it announced that there were 373,877 new taxpayers, bringing the total number of persons who had filed returns to 2,483,866. Compare that to 31.3 million personal bank account holders and over 100m CNIC holders (the exact number of CNICs issued to individuals by Nadra to date is not available).

To shame the public into cooperation, the FBR releases two directories — a Tax Payers Directory for All Taxpayers and a Parliamentarians’ Directory of Tax Payers. The latest editions are for the fiscal year ending June 30, 2017. Both are facts derived from fiction. Now that the information in them is in the public domain, Mr Jahangir Tareen will have no objection to the disclosure that in 2017, he paid income tax of Rs97,317,272. Nor should Asad Umar. He paid Rs4,849,615 in taxes. Measure that against the figure of Rs4,692,897 — the total tax paid by prime minister Imran Khan over 36 years, from 1981 to 2017. And the FBR still does not know what to do with Mian Nawaz Sharif’s contribution of Rs263,173 to the national exchequer.

Is Mr Zaidi’s proposal — “the pain of penalty” — the only scourge to force the moneyed classes to pay taxes? Shaikh Rashid bin Saeed al Maktoum, the sage ruler of Dubai, had a novel solution. As his emirate became Croesus-rich, he imposed a nominal municipal tax. When his subjects complained, he mollified them with the explanation that if he imposed taxes when times were stringent, the public would react. Tax them during a time of affluence and they would hardly notice.

Is it beyond the imagination of the government to collect a nominal amount, say Rs100, from every CNIC holder to begin with? Once 100 million-plus adults are in the tax net, increase that amount annually. Even arsenic ingested in small doses can be therapeutic.

Pakistan is in danger of collapsing not from FBR’s poison but from being weakened by recurring bouts of fiscal anaemia.

The writer is an author.

www.fsaijazuddin.pk

Published in Dawn, July 9th, 2020