IN November 2000, the Ad-hoc Public Accounts Committee took a serious notice of the budget management by the Central Board of Revenue (CBR), and asked its administrators to improve it and monitor the expenditure more closely.

During 2000-2001, the Federal Tax Ombudsman passed a number of strictures against the maladministration of CBR and its subordinate offices.

The CBR has flagrantly violated the opinions / rulings pronounced by the Law Division and the higher courts.

The CBR, apex body for management of federal taxes, has been mismanaging its own affairs. It is a tragic situation. How can the CBR be trusted with collection of taxes when its own house is in disorder?

In recent years, the public dissatisfaction with the CBR has increased in alarming proportions. It’s shenanigans in dealing with imposition of sales tax on goods other than stock-in-trade, designing new return forms, inordinate delay in announcing self-assessment scheme (SAS) for assessment year 2000-2001 and selection of cases for total audit amongst the return qualified for the SAS for 2001-2002 in utter violation of law leading to loss of revenue of worth billion of rupees and mismanaging the issue of 1300 employees suspended without any tangible evidence prove beyond any doubt how the CBR wizards are conducting even the routine affairs, not to talk of any long-term visionary policy to streamline our tax system.

There is documented evidence available to confirm the transgressions of power by the CBR in recent years in matters of exercising its delegated authority under various fiscal laws.

It is a matter of great concern that on the one hand, the CBR’s own affairs are a subject matter of serious criticism from the public at large, Ad-hoc Public Accounts Committee, taxpayers, trade and professional bodies and on the other it has been creating a situation of perpetual confrontation with the taxpayers. At this critical juncture of our history when national consensus is the need of the hour and our trade and industry is badly affected by “war on terrorism”, the CBR is blatantly withholding refunds worth billion of rupees, thus causing a death blow to the trade, industry and financial institutions in general and the exporters in particular.

The nation as a whole must strive to come out of this crisis. All the people should pay the taxes under the law, including the mighty civil-military bureaucrats, judges, professionals, politicians and wealthy businessmen and agriculturists.

If these segments of society pay their taxes honestly and diligently others will certainly follow suit. It is a natural law that in a society if the powerful do not obey the rule of law, the other strata of society automatically resort to lawlessness.

The rule of law should be for everybody and not for the weaker ones. The worst aspect of our tax system is its inequality. The Income Tax Ordinance, 1979 taxes the profit earned by a widow on her bank account at the rate of 10 per cent without any exemption or basic tax limit, but grants tax exemption of millions of rupees to Hubco Power Company, with which it has been engaged in a bitter legal battle. This is a mockery of law.

The CBR was brutally politicized by the successive governments in Pakistan. The high-ranking postings in CBR were made to serve as handmaid of the political masters. In return, CBR’s high-ups served the “interests” of their political bosses even beyond their expectations.

The case of awarding contracts to Contecna, (a Swiss company) during the Benazir government, presents a classic study of “close connections” between the political rulers and tax administrators. It shows how CBR’s high-ups deprived the nation of billions of rupees to please their political masters. In the process they made a “fortune” for themselves as well.

It is a matter of record that one ex-chairman, CBR, has been declared a proclaimed offender in a criminal case. Yet another chairman joined hands with the rulers of the day.

He issued numerous beneficial notifications for the benefit of the industrial units of his mentors. He himself owns (through family) a number of steel re-rolling mills.

During his tenure as the chairman, CBR, his mills supplied defective products to a foreign investors’ power plant. Due to this criminal act, the image of the country was badly tarnished in the eyes of foreign investors. There are numerous such cases.

It is a sad reflection on our fiscal management. The corrupt and resourceful are still holding key posts in the CBR. They have even managed to hoodwink the present military government by shifting the blame of low revenues and massive tax evasion to the traders and businessmen. In fact, they are the real culprits.

They were encouraging the profit-hungry traders and businessmen not to pay taxes but just give them their due “share”. The mass scale evasion of taxes was not possible without the connivance of tax administrators.traitors).

The tax-evaders and tax administrators together constitute a mafia that has made Pakistan a haven for tax dodgers and plunders of national wealth.

The tax administrators have been encouraging drug traffickers and criminals to bring as much money as they want into Pakistan through normal banking channels and no question about their “source” would be asked. This facility, they claim, is necessary to revive the economy.

Such a lethal prescription for revival of economy has destroyed the entire social fabric of the society. The inner story is that the mafia-like operations and collaborations exist between the tax administrators and the drug barons, criminals and tax evaders.

Things have not changed even under the present regime. A well-designed conspiracy was hatched to distort the image of the present regime in the eyes of the people through harsh, illogical and unfriendly tax measures.

The CBR has been instrumental in encouraging black money (including proceeds of drug trade) in Pakistan. It has been a tool in the hands of corrupt politicians to get enormous tax benefits through the infamous SRO system.

There is an urgent need to revamp the CBR. It should be an autonomous body free of any outside interference / pressures. Professionals to ensure that taxes wherever due are collected without any exception must run it. The government should scrupulously respect its autonomy and the Board should be insulated from political pressures.

Delegation of full financial powers to the CBR on the lines of the State Bank of Pakistan is the need of the hour. Such powers are absolutely necessary if the Board is to discharge adequately its responsibility of running the tax apparatus efficiently. The time is now ripe for making CBR as autonomous and independent body free from its secretarial workings.

The government while scrupulously respecting its autonomy and independence may enjoy powers to issue directions of a general nature in writing, wherever necessary.

Our economic survival now depends upon forming efficient tax collection machinery, manned by efficient professionals and headed by thoroughly scrupulous persons. The process of depolitization should be a simultaneous exercise making the CBR a truly independent and financially autonomous organization.