Prime Minister Shehbaz Sharif told the Federal Board of Revenue that he would not submit to blackmail by any mafias, and would prefer to resign rather than do so. This was a massage not just for the tax collection machinery whose suborning was necessary to allow mafias to evade taxes, but also for allies as well as backers. Mainly, it must be presumed, it was a message for the International Monetary Fund, which had just reached a staff-level agreement on a three-year $7 billion package, on certain stringent conditions, including increasing revenue for the financial year just started by 40 percent. The success or failure of the IMF package thus depends heavily on the FBR achieving this target.
However, Mr Sharif hamstrung tax officials by saying that they were not to harass traders or investors. That is the only method that many officials know to increase revenue, and the institution will have to change its attitude from one of a protection racket to one of a collection agency. However, Mr Sharif spoke from his experience as a businessman and as a business leader However, he was saying that he would not be part of the cozy you-scratch-my-back-and-I’ll-scratch-yours arrangement, whereby certain lobbies would be allowed to evade taxes, and taxation officials would be allowed to put the squeeze on others; and in both cases, it would be the state which would suffer because of lost revenue. It is an unfortunate reality that ‘business-friendly government’ should mean one that allows evasion, but Mr Sharif and the FBR will have to change that if the conditions of the present IMF package are met. It should not be forgotten that the government, and the FBR, will be kept on their toes by the IMF through the six-monthly reviews it will carry out.
Mr Sharif seems to place great reliance on technology, and stressed that digitisation would enable the CBR to enhance revenues. Mr Sharif seems to have a touching belief in technology, as also evidenced by his belief in the ability of solarisation of tubewells to reduce oil import bills. However, it was interesting to see that the absence of any mention of incentives showed that Mr Sharif also knows that petty increases in grades or salaries would not tempt officials who were used to much greater revenue streams from the bent taxpayer. However, FBRR officials should pay attention; it is not a coincidence that Mr Sharif’s visit coincided with the IMF’s agreement. The message should be clear: if the IMF deal falls flat because of revenue slippages, the FBR will carry the can.
