The Inland Revenue Service (IRS) has asked the Election Commission of Pakistan to prevent the illegal and unconstitutional restructuring of the Federal Board of Revenue (FBR).
The request was made during the first meeting of a federal cabinet sub-committee on Wednesday. A day earlier, the cabinet convened a meeting to study the tax machinery’s revamp. The cabinet declined to approve the summary to restructure FBR and challenged the government’s legal authority to carry out such a process, reported Express Tribune.
Another cabinet meeting is set for today (Thursday). The finance minister has recommended separating the Inland Revenue Board and the Federal Customs Board, as well as separating tax policy from operations.
The caretaker finance minister has undertaken the work of restructuring FBR to raise the tax-to-GDP ratio from 8.5 percent to 22 percent. However, the suggested process lacks a clear path to completing the task. Consequently, the IRS has asked ECP to intervene and prohibit the Ministry of Privatization from selling debt-ridden Pakistan International Airlines (PIA).
The IRS asserts that the FBR overhaul is illegal, and unconstitutional and should be shelved immediately. It said in its request that making such changes in the Revenue Department without any debate in parliament would collapse the system.
Similarly, the IRS has opposed launching oversight boards, claiming that such boards will allow vested interests to flourish and may even include individuals with conflicts of interest.
It went on to say that as part of the restructuring plan, a new Federal Policy Board (FPB) will be put in charge of tax policy. The FPB will report directly to the finance minister, politicizing its position since members will also be from the private sector.
It is pertinent to mention here that the Secretary Revenue/ Chairman FBR forwarded the summary regarding the restructuring of FBR after the conclusion of the consultation between the top management of FBR and Special Investment Facilitation Council (SIFC) and Caretaker Finance Minister Shamshad Akhtar in FBR last Saturday.
The SIFC had approved the separation of Inland Revenue and Pakistan Customs, the two arms of FBR on January 3rd, 2024. In addition, both departments including the Inland Revenue Service and Pakistan Custom Service will be regulated through their Boards.
The bureaucracy doing what it does best: looking after their own and ensuring that their income stream remains intact.
The corrupt elements do not want restructuring of FBR, it is very logical that tax to GDP ratio should be increased, and we have to take the examples of other developing countries.