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Revamping the CBR

Recommendations of the TF will be made public to seek popular opinion before implementing the report

Feb 19 - 25, 2001

The much awaited report of the task force on restructuring of Central Board of Revenue may be presented to the Finance Minister by the end of this month. The task force led by Shahid Hussain, formerly of the World Bank was to submit its report in December last but the same ran into snag because of difference of opinion between the Chairman of CBR and the Task Force. The task force was asked to resolve the issue and submit the final report by end of February.

The TF had engaged consultants about eight months ago, who launched a study into tax procedures and operations for listing the distortions and corrupt practices in implementation of the tax policy. These consultants presented a report, which was examined by the Finance Minister before it was to be presented to the CE. The Finance Minister and the CBR officials had found that the report was based on certain studies, which had drawn wrong conclusions and a restructuring based on these conclusions would be counterproductive.

The Chairman is engaged these days in meetings with his consultants, mostly from Private Sector, to finalise the recommendation for presentation to the Finance Minister. The Finance Ministry had decided that the recommendations of the TF will be made public to seek popular opinion before implementing the report. Stakeholders mainly the tax payers and the public would be notified of the suggestions to revamp the CBR against whom the tax payers have a plethora of complaints like corruption, harassment and misuse of discretionary powers.

The establishment of the Task Force in July last year was part of government's manifold efforts to bring about comprehensive improvement in the taxation system. The establishment of Tax Ombudsman and tax advisory council were other initiatives like the tax survey and documentation of economy drive.

Soon after its inception the Task Force formed certain subgroups, and consultants were appointed to assist them. Consequently, a number of presentations were made to the Finance Minister and the Chief Executive who had directed that nothing short of a paradigm shift was paramount. Based on the analysis and findings of the consultants, the subgroups and members of the task force discussed various issues at length. Among other things, the terms of reference of the Task Force included.

— review of existing management and policies of CBR and evaluation of their effectiveness,
— review of management of human resources i.e. recruitment training, promotion, evaluation of performance and discipline.
— review the compensation system with its effectiveness in attracting and motivating qualified persons and ensuring integrity.
— review the causes of corruption among staff and management of information for effectiveness of the tax machinery.
— review organizational structure in relation to needs for minimising costs, speedy processing and decision making and engendering a sense of service and accountability.

It will also examine the organisational design and human resource reforms, along with merging various managerial functional groups. The present system of recruitment of personnel, training and compensation packages, performance evaluation, separation of corrupt and honest officers and expenses would come under discussions during the ongoing five day meetings.

Another key issue is of retaining the CBR in its present form or its conversion to Pakistan Revenue Authority would be a focal point of reorganization of tax administration, particularly as a consequence of livable compensation package for CBR officials.

At early stage of establishment of the task force, finance minister had indicated that to create a system of integrity in the tax department, an increase in compensation package along with adequate infrastructure and information management system would be imperative. An important question is the implementation of the report by the government. In the past several reports of high-powered commissions and committees or study groups on tax reforms have been largely scuttled. The general impression is that CBR is averse to change. This was seen right from the beginnings of the task force on the ground that the CBR itself was in the process of reforming the taxation system and has the capability to do so. As things happened, the results of the documentation drive and survey have failed to give anticipated enhancement in revenues. A shortfall of Rs.13 billion has taken place. What is worse, the credibility gap between the taxpayers and the collectors has surged upwards. The task force is laying great stress on implementation of the recommendations to achieve the paradigm shift it is keenly working at as directed by the Chief Executive and as the situation warrants.

It is pointed out that CBR has been rather apathetic to all reform measures and various tax commission's reports have been lying in cold storage. It is for the first time that quantum of CBR receipts, corruption, issues of reorganization and reforms have been of immense concern in recent years, to the country as well as to the donors. The reforms of the tax machinery and system are of critical importance for all concerned. Along with quantum jump in tax receipts as well as in exports could save the country from the tightening stranglehold of debt.