Unanswered questions as FBR autonomy comes under scrutiny

ISLAMABAD: The IMF and other international financial institutions have been emphasising making FBR autonomous. However, the proposed structure makes the IRS and Customs Board subordinate to oversight by federal secretaries and private members, thereby further curtailing autonomy.

This poses a serious question: why do the caretakers prefer to keep everything under the carpet in the name of overhauling the tax machinery, having no clue about what is being planned in the restructuring plan of the FBR?

Relevant tax authorities and experts have raised voices and asked pertinent questions for the caretaker government. However, the caretakers, behaving like chair-takers, show no concern about being accountable or answerable to anyone.

(1) What is the wisdom of subordinating the tax-collecting machinery to federal secretaries with absolutely no tax background?

(2) How will the issue of conflict of interest in the appointment of private members be resolved?

(3) Who will take credit for the collection of income tax, sales tax, and FED at the import stage? If the answer is the IRS, then what justifies having a customs board collect and report only around 10% of federal taxes?

(4) What effect will it have on the morale of IRS and Customs officers when they see their top brass in a subservient role to non-professionals?

(5) If the restructuring plan is positive, then why is it being kept under wraps, and why are the minutes or decisions of the meeting not in the public domain?

(6) If the Customs Board will be making decisions on tariffs (as the reports available so far do not indicate that tariff changes will be the mandate of the revenue division), why shouldn’t the IRS board make policies relating to income tax, sales tax, and FED?

(7) Tax collection is a function of policy and administration. If policy is not under the IRS and Customs board, then who should be responsible for achieving revenue targets, and wouldn’t it lead to shifting blame between administration and policy?

(8) If, as reported, the Customs workforce was consulted on the restructuring plans, why was the IRS kept in the dark?

(9) The fragmentation of tax collection between imports and domestic transactions does not consider that economic transactions cannot be fragmented. It needs to be realised that imported raw materials and finished goods are consumed in the domestic economy. If these are cleared at the import stage at under-invoiced values, they will remain underpriced in the local market, compromising domestic collection. To collect due taxes, it is imperative to integrate and develop linkages between imports and domestic transactions rather than further fragmenting them.

(10) If the way to go is to separate customs and IRS, then why is the UK still running “Her Majesty’s Revenue and Customs,” formed by the merger of the Inland Revenue and HM Customs and Excise, which took effect on April 18, 2005?