New tax culture from
From SHAMIM AHMED
Jul 24 - 30, 2000
Federal Minister for Finance, Mr. Shaukat Aziz while talking to the
newsmen informally at the conclusion of Dr. Mehboob-ul-Haq Memorial Seminar in Islamabad
disclosed that a new tax system would be put in place from January 2001. The new system,
he claimed, would be simple and understandable providing maximum facilities to the
taxpayer and curtailing drastically the discretionary powers of taxation authorities.
The new system will be formulated in the light of the report of the
committee on restructuring of CBR and taxation system and results of the on going tax
survey of 13 major cities of the country which is likely to be concluded by Oct. 2000.
"The current taxation system is defective and, therefore, it has to be thoroughly
reviewed and suitably amended," he added.
Mr. Aziz said the committee on restructuring of CBR, headed by Shahid
Hussain had submitted its initial report. "We reviewed the report at a meeting and
decided to set up a 10-member advisory board, consisting of two tax lawyers, two
businessmen, two academics, one information technology expert and CBR officials.
In addition to that, four task forces would also be constituted to
propose reforms in the taxation system. One of the task forces would deal with human
resources and Dr. Wasim Azhar would be its coordinator. Under the task force on tax
processing, separate committees on income tax, sales tax, customs duty and central excise
duty would be set up to simplify the payment of taxes and to ensure minimum contact
between the taxpayers and the officials.
Separate method would be devised for the collection of sales tax,
custom duty and central excise duty. The task force on information technology would help
restructure the CBR on modern lines, Dr. Altamash Kamal will be the coordinator of the
task force. The advisory board and task forces would give their recommendations to the
government by Oct. 30 on which the opinion of the public would be sought. And these
recommendations will be announced before Dec.31.
The task force on tax administration reforms will review causes of
corruption among the staff and the management of the CBR. The task force on tax
administration reforms has been constituted to suggest measures to improve efficiency of
taxmen, which lack skills and ability to generate additional revenues for the country.
Tardy tax system, weak enforcement of policies and rampant corruption
has resulted in non-compliance and widespread tax evasion in the country. Tax to GDP ratio
has narrowed down to around 10 per cent and, only one out of every 100 people is paying
Though the recently launched drive to enforce documentation through tax
survey is a key to all future revenue needs of the country, tax administration reforms are
needed to simplify the procedures to facilitate taxpayers in a transparent manner.
The task force on tax administration will investigate and recommend
measures to improve the ability of tax machinery to collect taxes efficiently, with
integrity and without undue coercion of taxpayers.
The main objective of the task force would include.
Review the causes of corruption among staff and management of the
tax administration and recommend measures to eliminate corruption.
Review the existing management and policies of the CBR and its
subordinate organisations to evaluate their effectiveness.
Review the management of human resources, including recruitment,
training, promotion, evaluation of performance and discipline.
Review the compensation system for its effectiveness in
attracting and motivating qualified persons and ensuring integrity.
Review system and processes, particularly for the management of
information as a key ingredient in improving the effectiveness of the tax machinery.
Review the organisation and structure of the tax administration
in relation to the needs of cost minimisation, speedy processing and decision making,
engendering a sense of service and accountability.
The legal and administration status of the CBR and its subordinate
organisations would also be reviewed.
The task force will be supported by the CBR for research and analysis
of specific issues. It will hire consultants on subjects where the required expertise is
not available. It will seek the views of organizations representing taxpayers, tax
accountants and tax lawyers on the issues they face viz a vis the tax administration.
The task force will also chalk out a detailed implementation strategy
and would design a roadmap to achieve the end goals set in the final report, which would
be presented to the Finance Minister by December 2000. The task force comprises the
Syed Shahid Hussain, Chairman, Badruddin B. Vellani, Vellani &
Vellani Advocates; Athar Minaullah Afridi, Shah & Minaullah Advocates; Naeem Akhtar
Sheikh, FCA, S. M. Masood Chartered Accountants; Shabbar H. Zaidi, FCA, AF Ferguson
Chartered Accountants; Khawar A Khawaja, Chief Executive, Grays of Cambridge; Ahsan M.
Saleem, Crescent Steel and Allied Products Limited; Dr. Waseem Azhar, LUMS; Shahid Amjad
Chaudhry, Lahore School of Economics; Altamash Kamal, XIBER.CDM Syed Riaz Hussain Naqvi,
Chairman CBR; and Ahmad Khan, Member Monopoly Control Authority. Mr. Ahmad Khan will also
be the secretary of the task force.
The task force gave a briefing to the Chief Executive General Pervez
Musharraf in Islamabad informing him of the methodology on which it was working. In
principle agreeing with the lines on which the task force was proceeding the Chief
Executive, once again stressed major structural reforms in the tax administration.
Regretting mistrust between the taxpayers and the tax collection authorities, he ordered
that the services, particularly the tax administration, should be turned into an
efficient, viable and corruption free institution.
General Musharraf said the mistrust between the taxpayers and the tax
collection authority, "has become even more apparent during the recent survey"
and the drive to document the economy. He stressed the need to evolve and implement a
system at the earliest by which the discretionary powers of the tax collecting agencies
could be minimized.