Tax reforms hit by uncertainty amid cabinet reshuffle

Published December 13, 2020
The cabinet notification reads Dr Hafeez Shai­kh will look after the portfolio of finance with no reference of the revenue portfolio that he had held before being made a federal minister. — DawnNewsTV/File
The cabinet notification reads Dr Hafeez Shai­kh will look after the portfolio of finance with no reference of the revenue portfolio that he had held before being made a federal minister. — DawnNewsTV/File

ISLAMABAD: The federal government’s notification has added to uncertainty in the po­wer corridors as to who will look after the aff­airs of Pakistan’s top tax machinery after the former adviser to the prime minister on fin­ance and revenue, Dr Hafeez Shaikh, was elevated to the position of finance minister only.

The cabinet notification reads Dr Shai­kh will look after the portfolio of finance with no reference of the revenue portfolio that he had held before being made a federal minister.

The notification reads in exercise of powers conferred by clause (1) of Article 92, read with Article 91 (9) of the Constitution, the president, on the advice of the prime minister, has been pleased to appoint Dr Abdul Hafeez Shaikh as federal minister. He will hold the portfolio of finance as allocated by the prime minister in terms of rule 3 (4) of the Rules of Business, 1973.

When a top official in the Federal Board of Revenue (FBR) was asked about the developments, he expressed his ignorance. He said he was also not aware as to who would look after the affairs of the revenue division since the issuance of notification a day ago.

The government recently appointed a retired federal finance secretary, Dr Waqar Masood Khan, as special assistant to the prime minister on revenue with the status of a state minister. However, he was reporting to then adviser Dr Hafeez as official in charge of the revenue division.

While talking to Dawn, a key cabinet minister said he was also not aware of the development and even did not know how it had happened. “I can comment on the development when I get some clarification from the cabinet division on Monday,” the minister remarked.

Also, there were claims that this might be the result of an ‘omission or error’ in the notification, but sources told Dawn that the notification was issued as per direction of the prime minister’s secretariat.

Last year in July, Prime Minister Imran Khan had given the portfolio of revenue to Hammad Azhar as federal minister only to take it back a day later while appointing him minister for economic affairs division instead. Later in March 2020, the PM made another attempt to appoint Haroon Akhtar Khan as his adviser on revenue with the status of federal minister. Despite wishes of the premier to separate revenue from finance, the move was blocked.

If the prime minister did not take back his decision this time, special assistant Dr Waqar would be reporting directly to him as minister in charge of revenue division. However, another source in the finance ministry said Dr Shaikh had approached the prime minister to record his displeasure over the decision. The prime minister assured him that the issue would be resolved within the next two to three days, the source added.

The government, while preparing the budget for the ongoing fiscal year had assured the International Monetary Fund (IMF) to raise Rs4.963 trillion in FY21 against Rs3.989tr collected in FY20 — a projected increase of 24.4pc. The first five months saw just over 4pc growth in revenue collection.

Since July 2020, the FBR affairs have been run on an ad hoc basis, which is leading to further shortfall in revenue collection at a time when the government needs money to bridge rising budget deficit.

Elevating Dr Shaikh as federal minister for six months while clipping away his revenue portfolio has further added to uncertainty at a time when the tax machinery needs policy direction to raise revenue.

Since July 4, the government has given additional charge of FBR chairman to member customs (policy) Javed Ghani and posted junior officers on key positions as some senior officers have been sidelined.

A few tax officials believed that ad hocism in the FBR gave leverage to those officials in the power corridor to control affairs of the tax machinery at the cost of reforms and broadening of tax base.

While the ruling Pakistan Tehreek-i-Insaf’s manifesto promises that the FBR will be turned into an autonomous body, which will be independent of any government influence, the promise of reforms seems just rhetoric due to frequent changes in government decisions during the past two years.

Mr Khan, in his first televised speech as prime minister, had highlighted urgent need to reform the tax body. “I will start with the FBR,” he had promised to the nation.

Published in Dawn, December 13th, 2020

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