Caretaker Finance Minister Dr. Shamshad Akhtar has constituted a task force on tax reforms in the Federal Board of Revenue (FBR).
The task force will be headed by the finance minister whereas its members will include Dr. Manzoor Ahmed, Dr. Musharraf R Cyan, Amanullah Amer, Aamir Ijaz Khan, Khalid Mahmood, Mehmood Khalid, Chairman FBR Malik Amjed Zubair Tiwana, and Dr Ardsher Saleem Tariq, Member (Reforms & Modernization), FBR as Secretary to the Task Force.
The terms of references (TORs) of the task force include:
- To develop proposals/measures for ease of paying taxes
- To propose an implementation plan for separating revenue collection and tax policy.
- Review FBR tax collection data and relevant analyses, and review tax system performance indicators and reporting mechanisms.
- Identify areas of revenue performance and potential, review the access of FBR to the internal and third-party data and its use in the tax administration.
- Seek proposals from relevant agencies on developing further data use in enhancing collection efficiencies.
- Lowering compliance and administrative costs, carrying out a review of the ongoing tax reforms, and their alignment with national policies and objectives.
- Assess implementation progress, and examine tax evasion, smuggling, corrupt practices, and other leakages and shortcomings.
- Propose concrete countermeasures, identify critical structural reforms of the tax administration, Human Resource requirements, redress of taxpayer grievance mechanisms, incentive alignment for tax collection, facilitation and compliance patterns, and other gaps and a way forward for efficient tax collection.
- Examine collection mechanisms of sales tax and income taxes.
- Assessment of import goods and online tax system, including a study of system Audit Reports for proposing measures to plug loopholes.
- Identify hurdles/bottlenecks in tax collection and suggestions.
- Concrete technology-based measures to cope with the problems.
- Review tax policy measures to capture an optimal tax base.
- Correct tax gaps and enhance economic efficiency and equity of the tax system.
- Analyze policy options for base assignment to improve collection systems.
- Examine the tax expenditures of the government and propose a mechanism for cost-benefit analysis for any proposal of tax exemptions.
- Make recommendations on the use of Information Technology to maximize tax compliance, enforcement, tax base broadening, facilitation, transparency, and accountability.
- Prepare and submit to the government a comprehensive report, focusing on missing elements, and proposing short-term, and long-term revenue.
- Reform measures, including restructuring of tax administration and changes in laws for bringing efficiency and increasing tax collection, present a vision of the tax system, both tax policy and administration for Pakistan in the long term.
The task force may interact with stakeholders and form sub-groups to co-opt any other person with the prior approval of the Finance Minister or avail services of any expert on a need basis. The task force will submit its recommendations within two weeks.
Commenting on the development, the Pakistan Business Council (PBC) in a post on X said that if the purpose of an independent Tax Policy Board is to avoid knee-jerk, short-term, revenue-seeking measures that undermine the longer-term, sustainable, and equitable policy objectives, then the proposed Tax Policy Board should not only be independent of the FBR but also of the Ministry of Finance which approves the annual budget, otherwise the temptation to tinker will remain.
If purpose of an independent Tax Policy Board is to avoid knee-jerk, short term, revenue seeking measures that undermine the longer term, sustainable and equitable policy objectives, then the proposed Tax Policy Board should not only be independent of the Federal Board of Revenue…
— The Pakistan Business Council (@ThePBC_Official) September 28, 2023
The statement said that ideally, it should be part of the Ministry of Planning. It pointed out that the country’s tax policy requires all three – good planning, equitable development of the fiscal policy and special initiates to broaden the tax base.
It also questioned the credibility of the intent for an independent tax policy unit, when the circular announcing its formation is signed by the FBR Chariman in his dual position as Secretary Revenue Division of the Ministry of Finance.