KARACHI, June 18: The country would soon have a banking Ombudsman for sorting out banking matters.

This was spelt out by the Finance Minister, Shaukat Aziz, while speaking at a seminar on the “Impact of Federal Tax Ombudsman (FTO) Ordinance on Federal Tax Administration,” organized by the FTO secretariat here on Tuesday.

It was attended by senior sitting and retired judges and officials besides a large number of lawyers.

Mr Aziz said tax reforms had been a major policy initiative of the government. He emphasized that taxpayers had an equal responsibility to make the reforms a success.

He said the ordinance with regard to the institution of FTO was labelled as credible and transparent and part of the government’s good governance measures.

Referring to the process of tax, the finance minister said the government’s aims was to maintain a balance between taxpayer and tax collector. He said the new law would be promulgated on July 1.

Mr Aziz said as a result of a survey over a million profile of taxpayers had been collected. Among them 2,68,000 new potential taxpayers had been identified.

He said in Karachi a large taxpayers unit would become operational from July 1 to provide one-window service to multinationals and large Pakistani firms. A similar operation would begin in November for 10,000 medium-sized enterprises of different scales.

The minister the FTO was aimed at preserving the tax regime. He appreciated the work so far done by the federal tax ombudsman.

In his keynote address, Justice Mujeebullah Siddiqui referred to the powers invested in the CBR and granting of various exemptions and to withdraw the same, from time to time. In exercise of this delegated authority the CBR, the apex body in the administrative hierarchy of tax administration, enjoyed the authority to drastically change the tax structure, and likewise various tax officials in the course of assessment proceedings in the realm of direct and indirect taxation were invested with discretionary powers which were at times exercised in an arbitrary or colourable manner.

From here the dilemma started because no assessment, no implementation of any administrative or fiscal policy and dispensation of judicial or quasi- judicial function could be discharged and acted upon without vesting of discretion in the hands of officials concerned with execution, implementation and operation of the laws, he said.

The imposition of taxes and collection had always been an unwelcome and unpleasant duty. The people mostly considered the imposition of taxes tyrannical and an instrument of terror. The problem had assumed a new dimension when the tax rates had been increased and the tax structure had become more broad based, he said.

Power of taxation being the most potent weapon to raise money and to bring about social and economic changes was also liable to be abused, he said.

Justice Siddiqui was of the view that the checks on abuse of powers and discretion vested in the tax officials, through administrative hierarchy of the department itself and judicial scrutiny, as well as judicial review of the administrative actions, had been found insufficient with the result that the establishment of an institution combining the simplicity of the procedure which should be a hallmark of an effective administrative set-up and judicial approach, impartiality and independence, was felt more than 1,000 years back.

The basic concept of the institution of ombudsman was directed at establishing a quasi-judicial-cum-executive forum, absolutely independent from the executive and, at the same time, free from the shackles of hyper technicalities and limitations of judiciary. It was a beautiful combination of the virtues of justice system and administrative check and control, free from cumbersome judicial procedures and delays and bureaucratic wranglings, he said.

He raised the question whether the institution of ombudsman was required at all in the wake of departmental control and checks, as well as the existence of judicial forums engaged in judicial scrutiny of the administrative actions. He said the institution of ombudsman was required to check and control effectively the misuse or abuse of the discretion vested with the tax officials and to cut down red tape, long-marked and time-consuming court procedures which some time proved ruinous and disastrous to a litigant. In a multi-appeal judicial hierarchy, things did not get settled quickly; instead, they kept hanging over the head of hapless litigants for decades.

Here, I would like to add a note of caution that the above observation is not meant to undermine either the importance or contribution of the appellate tribunals established under the fiscal statutes dealing with direct and indirect taxes, as well as the role played by the superior judiciary in the development of law through illuminative and erudite judgments, in exercise of their advisory jurisdiction under the law and writ jurisdiction of the constitution.

He also referred to various sections of the Federal Tax Ombudsman Ordinance. The most important being the authority to initiate any action on its own motion.

He also referred to the protection FTO provided in cases of frivolous complaints, which included provisions for awarding compensation to the revenue division and tax officials. This should create a sense of security in honest and upright tax officials against the onslaught of unscrupulous assessees, he said.

In a short span of time the institution of Federal tax Ombudsman had made its existence felt in all the tax departments under the revenue division. It was not a mean achievement by any standards. Valuable proposals had been made for improving the working knowledge of tax officials and the entire tax administration, he said.

The process of accountability appreciation of assessments made in accordance with the law and the implementation of tax laws in letter and in spirit was in progress.

Earlier, Justice Saleem Akhtar, the Federal Tax Ombudsman, emphasized that taxpayers and collectors should reform their attitude.

He said the government should be prepared to meet the demand to formulate a permanent and transparent tax policy not based on adhocism, free from discretionary excesses and discrimination, simplified documentation and honest and committed tax administration.

Referring to the institution of FTO, he said the institution had been developed not to replace the channels or forums of redress already provided, but to supplement and act in complement with the existing structure of administration. He emphasized that to create confidence it was necessary to protect the public against reprisal action by the department, which had been commonly observed by most of the countries where the institution of ombudsman existed.

In the concluding session, presided over by Justice S. Ahmed Sarwana of the SHC, the Chairman of the Board of Investment, Waseem Haqqi, presented his keynote address on “Maladministration in the federal department of revenue and potential of the Federal Tax Ombudsman Ordinance 2000 to address the same.”

In this context, he referred to the public perception that the tax administration in Pakistan was inefficient, vexatious and corrupt. Political and business leaders complained of static tax base, inelastic revenues, arbitrariness of policies and procedures, excessive administrative tiers and maladministration, he said.

He referred to the five areas identified by the task force on reform of the tax administration, and said the deficiencies of the tax system, identified by the task force, had actually been the cause of the prevalent mal- administration in the federal revenue department.

He said the institution of the Federal Tax Ombudsman had brought relief to genuine taxpayers. The FTO, he said, had not only been given the powers of a civil court, but in contempt cases it had the powers that were available to the Supreme Court. Referring to the rising confidence in the FTO, Mr Haqqi said the number of complaints, which had risen from 72 in December 2000 to 2,000 in mid-May this year. Out of those, 1,800 had been disposed of.

He pointed out that before the establishment of the FTO there was no institutional arrangement to redress the grievances of those who became victim of high-handedness by tax collectors.

He said the mandate of the FTO to take cognizance and root out maladministration in the federal tax system thus complimented the functions of the BOI for creating an investor-friendly environment.

Those who spoke at the seminar included Rehan Hasan Naqvi, Sirajul Haq Memon, Ataullah Khan, Wamiq Zuberi, Shahid Pervaiz Jami, Zubair Motiwala, Abu Nasser and S. M. Sibtain.