New tax chief’s task

Published April 12, 2021

THE FBR got a new chairman on Friday. Asim Ahmed, a senior IRS officer who was serving as the Board’s IT member before getting the new job, is the fifth chairman brought in by the ruling PTI since it came to power two and half years back. The frequent changes in the top leadership of the country’s premier tax agency are but a reflection of the government’s frustration with the FBR’s abysmal performance in the last three years. It also speaks volumes for the prevalent ad hoc policy regarding FBR, which generally defines the quality of governance or lack of it under the present dispensation. The new chairman has come at a time when the country’s tax collection has drastically declined over the last three years, and its poor performance is weakening the government’s fiscal position and adding to public debt stock.

In these circumstances, the new FBR chairman will face the gargantuan task of achieving the next fiscal’s tax target — which is 27pc greater than the expected collection this year — that the government has agreed with the IMF for the resumption of the suspended $6bn loan programme. His job is even tougher with the coronavirus resurging rapidly across the country, threatening to derail the nascent, fragile recovery and to further contract the narrow tax base. The more difficult task will be to implement reforms aimed at restructuring the nation’s inefficient and corrupt tax system to increase the number of taxpayers by bringing untaxed and under-taxed persons into the net through extensive automation. The extensive data already available with the FBR and other government agencies can also help identify tax cheaters. Another important task will be to cut the number of indirect taxes, reform the punishing withholding regime, and boost collection of direct taxes. Breaking status quo in a government department is never easy. If the government wants to plug the large tax gap and mobilise tax revenues, it will have to stand firmly behind the new chairman and ensure security of his tenure in his new office.

Published in Dawn, April 12th, 2021

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