The Federal Board of Revenue (FBR) has managed to collect more revenue than targeted in the first half of the financial year. This performance is doubly impressive, because it has been achieved without any cataclysmic reforms, without any of the measures which many have felt necessary to end the inefficiencies within the system. The present government’s experiment of a Chairman brought in from outside seems to have been beaten off by the FBR. The present Chairman, who fulfills the mould of the past by being an insider, has shown the government that even tough targets can be met.
The performance of the FBR is all the more crucial because on it depends the resumption of the IMF facility. This may well be the government’s motive for leaving alone the FBR, and even for the FBR attempting higher collection. The current FBR campaign to send notices to income tax non-filers, in which 1.4 million notices have been sent, will result in enhanced collection down the line, but soon will reach a limit.
At that point, the need for reforms will become glaringly obvious. The basic problem, of the FBR without reforms being both hostile to taxpayers and corrupt, has not gone away. Enhancing collections merely by increasing the pressure is not going to lead to permanent growth, unless the endemic problems of the tax collection machinery are solved. Whether or not a Chairman needs to be brought in from outside is not even tactical, just cosmetic. The really strategic approach required political will. The present government may have exploited resentment against a corrupt and persecuting machinery to come to office, but it has not shown the needed political will, or any concrete ideas, to bring about the required changes. The present improvement needs to be maintained, not just to get the IMF programme resumed, but because the country and the economy need it, but also because it needs reforms that are not visible on the horizon.
