The situation calls for reforms
in attitude and approach on both sides
By Syed M. Aslam
June 24 - 30, 2002
"We are mindful of the fact that there should be
balance of power between the tax payers and tax collectors. This is also
necessary for good governance. Tax reforms have been made policies of
this government. In December 1999, President General Musharraf called
for expanding the tax regime and one of the key ingredient of it was
establishment of Federal Tax Ombudsman."
The words were part of the speech delivered by
Federal Finance Minister Shaukat Aziz at the seminar "Impact of
Federal Tax Ombudsman on Federal Tax Administration" at a Karachi
hotel. PAGE attended the seminar which was organized by the
Federal Tax Ombudsman Secretariat. The Institution of Federal Tax
Ombudsman was established on September 19, 2000 through an Ordinance.
The main objective of this institution is to investigate and inquire
into allegations against Revenue Division or any tax employee to rectify
any injustice to a tax-related grievance — individual or corporate.
Hailing the establishment of the Institution to
provide an easy, quick and impartial recourse to aggrieved tax payers
the minister said that such a dispute mechanism helps eradicate civil
litigations which help no one. "In addition, it also help create an
environment of effective accountability."
Saying that the process of tax reforms is not just
appointment of few people and a name change, the minister stressed that
the key to tax reform is to the change the rules of the game, increased
interaction between tax payers and tax collectors to avoid
contradictions due to less interaction between the two in the past.
"IT officials will still visit your offices, look at your records
but there will be perimeters.
"For the first time we have a historic easy tax
payment process of paying taxes as well as an effective recourse for any
injustices. This remarkable and historic change will get going. But you
better have facts because Ombudsman's investigation will be basically
audit-based. We have prepared one million profiles of tax payers and
feel that direct taxes have done better than any other tax. [It is most
appropriate to mention here that in Budget 2002-03 the direct tax
receipts are projected at Rs 148 billion compared to much higher share
of indirect taxes projected at Rs 312.2 billion.] In addition, we have
identified 258,000 potential tax payers and will be looking at tax
opportunities wherever they are. Despite hiccups and blimps we will keep
moving along to ensure that all of us should pay our due taxes as we
simplify the tax process to make it further easier.
"Basic record keeping will be required and our
goal is to set up a single window tax collecting operation in Karachi
from July 1 as the government realizes that most of your problems are
irritants and we intend to remove them. Taxes in Pakistan are the lowest
in the world, perhaps one of the lowest in the world."
The minister also announced that the government will
be establishing an institution of Banking shortly on the lines of Tax
Ombudsman to serve as dispute mechanism pertaining to tax matters in the
Tracing the 'dark history' of relationship between
the taxpayers and tax collectors the Federal Tax Ombudsman, Mr Justice (Retd.)
Saleem Akhtar, said that the concept of non-payment of tax has been
passed down from generations without realizing that we no longer are
under foreign domination. On the other hand, he added, the attitude and
performance of the tax administrators have been bureaucratic, arrogant,
non-cooperative, highly technical and complex. The situation, thus,
calls for reforms in attitude and approach on both sides.
Describing the aims and objectives of his institution
'charged with the duty of independent oversight of tax administration'
he said that 'accountability is the corner stone of a transparent
administration and good governance. This is the point where Federal Tax
Ombudsman steps in. Civilian oversight is no longer a myth but a
Justice (Retd.) Saleem Akhtar said that the
institution is developed not to replace the channels or forum of redress
already provided, but to supplement and act in complement with the
structure of the administration. He informed the participants of the
seminar that 'during a period of more than one and a half years I have
received cooperation more than opposition and tried to bring about
stability, confidence, accountability, trust, systematic reforms in Tax
administration and provided relief to aggrieved persons who had suffered
due to mal-administration. A balance has been maintained in the rights
and duties of the parties. And above all efforts have been made to act
as a bridge to eliminate hostility and mistrust."
With the Institution of the Federal Tax Ombudsman
already functioning for last year and a half and a creation of a similar
institution to oversee related issue in the Banking sector shortly, the
volume of costly civil litigations pertaining to tax matters are
expected to save millions in legal fees and hundreds of hours which can
used more productively elsewhere. As the minister said,
"Litigations help no one."