Caretakers Defer FBR Restructuring to Newly Elected Govt
By Newztodays Team
The caretaker government has deferred the task of FBR restructuring to the newly elected government, citing legal obstacles.
During a cabinet meeting, a detailed discussion ensued regarding the legality of the proposed restructuring under the caretaker government’s mandate.
The Ministry of Law & Justice highlighted the need for amendments to the FBR Act and other pertinent laws, including the Rules of Business, 1973.
It was determined that such large-scale structural changes fell within the purview of the newly elected government, as outlined in the constitutional framework and the Elections Act.FBR and FMU To Combat Illicit Finance
The consensus among members was that while the caretaker cabinet could initiate groundwork in the public interest, legislative action should be left to the new government.
Acknowledging the comprehensive proposals prepared by the Minister for Finance and Revenue to reform the FBR, the cabinet reviewed a summary titled ‘Restructuring of Federal Board of Revenue and Digitisation’ dated 21 January 2024. Subsequently, an Inter-Ministerial Committee, chaired by the Finance Minister and comprising members from various ministries, was formed to deliberate on the reform proposals and refine them for further consideration.
Key reform objectives included simplifying the tax return form to facilitate easier comprehension and reducing its length to no more than two pages. However, legislative action to enact these reforms was deemed the responsibility of the new elected government.
In-depth discussions during the meeting highlighted concerns regarding tax collection efficiency and revenue generation. Despite tax collection standing at 8.5% of GDP, a significant portion of potential taxpayers remained non-compliant, particularly within the salaried class. The proposed restructuring aimed to address these issues, yet doubts lingered regarding its efficacy in bridging the gap between tax policy and compliance.
The cabinet identified corruption, misuse of power, complex tax return forms, and sectoral exemptions as key obstacles to revenue generation. Concerns were raised regarding undue influence from politically affiliated groups in shaping tax policy, detracting from the nation’s welfare.
Addressing the low number of tax filers, suggestions were made to simplify the tax return process and mandate tax filing for individuals exceeding income thresholds, excluding beneficiaries of the BISP.
Regarding the proposed Policy Board, criteria ensuring members’ suitability, qualifications, and independence were emphasized, with a consensus emerging against appointing legislative members to executive forums.
The Ministry of Finance highlighted the need for transparency and integrity within the FBR, proposing the establishment of an Integrity Unit. Additionally, plans for bifurcating the FBR at the management level into oversight bodies for IRS and Customs, along with the integration of Artificial Intelligence and digitization, were discussed.
The cabinet agreed on the government’s prerogative to appoint the Secretary Revenue, emphasizing competence over cadre affiliation.
