Prime Minister Shehbaz Sharif paid the Federal Board of Revenue his second visit in a week on Thursday, underscoring the importance he feels the FBR plays in his efforts to raise the taxes needed for meeting the conditionalities of the recent $7 billion IMF package, of which an important component is the increasing of revenue collection. The meeting also showed his fascination with technology, for though digitization had been extensively discussed at the last meeting, the latest meeting was mostly about various pieces of new software which the FBR was using, particularly in the levying of customs and sales tax. One of the results of digitization has been the detection of Rs 60 billion in evaded taxes
It is worth noting that Mr Sharif still sees himself as representative of businessmen, and apparently sympathizes with their desire to stay outside the tax net at the same time as he recognizes the need to bring them within the net. That is one of the reasons he is interested in digitization, for it brings an element of objectivity to what has been a subjective process. Mr Sharif seems to realize that reducing taxation officials’ contact with taxpayers will prevent corruption. He touched another source of corruption when he ordered an increase of 100 in the number of appellate tribunals. Delays are a source of corruption, and it is said,” time is money”, and anything that can speed up any dispute resolution mechanism, is a source of corruption. Apart from the corruption aspect, with the FBR expanding its efforts, the number of disputes will also increase.
There are two strands visible in Mr Sharif’s engagement with the FBR. One is that of the IMF, which sees the FBR as the country’s main agent in collecting enough revenue to balance the budget. At the same time, Mr Sharif also sees the FBR as the centre of an extremely corrupt mechanism, whose members were more focused on lining their own pockets than collecting revenue for the state. Apart from problems with the tax laws, there are also problems with the tax collection machinery. Pieces of fancy software will only deliver results, in the tangible form of enhanced revenue, if the men behind the machine are not actively seeking means of subverting it, Mr Sharif may find that this is the biggest danger he faces.
