The writer is an
analyst and the
President of All
Schools’ Federatio n
Management is all about arranging and telling, whereas, leadership is about nurturing and enhancing. No strategy is effective unless ends and means are aligned. So Pakistan needs leaders and leadership requires wisdom, understanding, out-of-box solutions, forbearance and accountability. Today’s inspirational story is all about such a leader who seeks to influence others through their actions. Mr. Dr. Asif Mahmood Jah’s tenure as the Federal Tax Ombudsman (FTO) marked a transformative period in the landscape of FTO. His visionary leadership and dedication to upholding the principles significantly contributed to the progress and modernization of the FTO. This article explores Mr. Dr. Asif Mahmood Jah’s impactful role as FTO, highlighting the key initiatives and reforms undertaken by the FTO during his tenure to strengthen Law and Order processes and promote citizan values. Especially, under his leadership, the Office of FTO has been helping taxpayers and it has substantially contributed to address the pervasive tax administration systems’ maladministration. Tax collection is fundamental to run a State. A fair, just, efficient and simple taxation system is crucial to induce confidence amongst the people to pay their taxes as their national obligations. To address taxpayers’ grievance promptly and without any hassle, an effective redressal system is vital. The primary responsibility of the FTO is to ensure that complaints against tax administration are resolved promptly and fairly. In the leadership of Dr. Asif Mahmood Jah, FTO, this institution has provided relief to thousands of aggrieved tax payers and has played significant role to address the prevalent maladministration in taxation system. The contribution of the Federal Tax Ombudsman towards the cause of tax payers relief and full support of the endeavours made since joining in the year 2021 by Dr. Asif Mahmood Jah, FTO and his team included Mr. Almas Jowinda Haider, Mr. Khalid Javaid, Mr. Majid Qurashi is commendable. FTO Dr. Asif Mahmood Jah, after qualifying CSS examination, started his Career as Assistant Collector Customs in 1992 and rose to the post of Chief Collector (Customs) North, FBR. He brings
with him vast experience in all facets of Tax Administration, including Tax Operations, Tax Policy, Enforcement and Adjudication of tax related cases. Role as Federal Tax Ombudsman Pakistan Dr. Arif Alvi, President of Islamic Republic of Pakistan administered oath of Federal Tax Ombudsman to Dr. Asif Mahmood Jah on 29th September, 2021 and same day he assumed the charge of FTO. As we know that there exists a huge disconnect between the public and their faith in the tax system as well as in the often-delayed justice and legal system. There is a possibility that if the public is introduced to such avenues where their grievances are of utmost importance and are solved in minimal time a change can be anticipated in the public’s image of the governance. It is expected that the Office of the Ombudsman can bridge the gap between the public and the judicial system. It is heartening to note that over the past few years, the institution has carved itself into a primary state organ dedicated to eradicate tax maladministration and assist taxpayers in receiving the best possible support and service. We appreciate the efforts of the Federal Tax Ombudsman who has introduced many new initiatives, inter alia, the establishment of the Overseas Pakistanis Grievances Redressal Cell, the Launching of the Mobile Application, FTO portal, digital SMS, FTO YouTube Channel, the creation of five (05) additional regional offices at Abbottabad, Sargodha, Sukkur, Sialkot and Hub. It is hoped that these initiatives would enhance the outreach of the organization to provide justice to the taxpayers of these areas against the maladministration of the tax authorities. In addition to the above, the FTO has also detected some mega scandals in which FBR has been directed to take disciplinary action against the delinquent officers and officials.
Federal Tax Ombudsman has vital role in providing justice to taxpayers on complaints of maladministration by hierarchy of tax authorities. In this behalf FTO has wide power of investigation including inspection. Cognizance of maladministration can also be taken on own motion notice or by reference by the Federal Government, Courts or Legislative Bodies. Complete autonomy administrative as well as financial is provided to the FTO. His tenure is also ensured and protected under law and he has been conferred upon the power to exercise jurisdiction for contempt as the Supreme Court has to punish any person for contempt. Federal Tax Ombudsman provides expeditious and in-expensive justice to taxpayers and persons who have genuine grievances against the Federal Tax Authorities. The economic spectra looming large on the national horizon is what is now driving the national demand for economic reform including broad basing of taxation which is one of the critical keys for bringing about the much needed economic turn-around, fiscal discipline being an uncompromiseable national imperative. Wide spread demand for accountability and transparency can hopefully bring about fiscal responsibility, if relentlessly achieved. The key for correction of this paradigm lies mainly in the human resource responsible for tax enforcement as much as in the system design and documentation of economy. Under the leadership of Dr. Asif Jah at FTO Secretariat, the core issues have been examined quite in detail: Widening the Tax Base in the Context of a Fair, Just and Transparent Tax System; Diagnosing the Systemic Issues of Tax Maladministration and Suggesting Sustainable Remedies; Need for a Taxpayers’ Bill of Rights; Expanding FTO’s Outreach for Awareness and Suggesting Ways and Means for its Improvement and Sustainability. Pakistan has experimented many ways to develop a tax culture but with least concern to actual stakeholders. The reliance on amnesty schemes, shifting reliance from direct taxes to indirect taxes and on final tax regimes were the measures aiming towards improving collection of revenue alone instead of inculcating tax culture in the country. The behavior of citizens has also not been conducive in discharging their obligation to the State. These factors coupled with many other socio-economic realities promoted low level of compliance in the country. The aim of Dr. Asif Jah is that the tax policies are designed to ensure financing of governmental actions and to achieve sustainable basis for economic growth.
Pakistan needs a team of leaders like Dr. Asif Mahmood Jah who can grow, achieve and boast the image of Pakistan, with his expertise, experience, invaluable insights, inspiring ideas, and best practices. His tenure as the Federal Tax Ombudsman (FTO) marked a transformative period in the landscape of FTO. Indeed, Pakistan needs leaders, not bosses!
Efficiency and cost effectiveness can only be achieved if the available technology is properly utilized. A favored public revenue strategy today is to make taxation as broad- based as possible that is, to spread it out over all potential sources. A recent study by NADRA has found that 2.38 million potential taxpayers do not have NTNs. Embedded impunity for tax evasion and well-entrenched corruption and inefficiency in the tax collection machinery are the two main causes of narrow tax base. Consequently, the share of income tax in GDP is constantly on the decline from 3.85% achieved in 2016-17, it winded down to 3.3% in 2020-21. But narrow tax base phenomenon cannot be confined only to income tax as the tax bases of sales tax and customs duties are also equally skewed and narrow. Whereas indirect taxes are almost invariably being paid by the citizens as part of price of goods and services, these taxes, in the most part, are being retained by middle men and collection agents. Thus the indirect taxes paid do not invariably find their way to the national exchequer. The nation is therefore, losing on both the ends of the taxation continuum. This is precisely what defines our tax predicament, in terms of an extremely narrow tax base, weak enforcement, fast eroding fiscal space and miscarriage of the distributive function of taxation. The key areas requiring immediate attention are better tax education, simplification of tax procedures, creating conducive social, political and economic environment and developing information technology facilities. To achieve these aim and objectives, there should be a statutory body for policy making process, separate from FBR, represented by; the Planning Commission, Ministry of Finance, Ministry of Law, FBR, professionals and organizations like ICAP, Tax Bars, Chambers of Commerce and Stock exchange. The role and organization of the FBR leaving collection, with related policy formulation, alone with the institution. This is consistent with best practices worldwide. It would help prevent political interference, foster accountability, and support. The CNIC number of a person should be the identifier for all tax transactions, both at the Federal and the Provincial level. National Tax Numbers should be restricted to the companies only. A central number will make filing easy for the tax payers, and will provide access to all information to all the relevant tax collection authorities. FBR has embarked upon a colossal computerization program, which will bear fruit only when a central data warehouse effectively links all departments within FBR, and acquire and disseminate information from and to third party sources especially Financial Institutions. Data mobilization with an integrated database system linked with NADRA will facilitate in coordination and sharing of information between the federal, provincial and local governments. Integrated Management System (IMS) is required which is already in advance stage of development. This data is then compared with the return filed or not filed by the Taxpayers and non-taxpayers. After the automatic data mining there is an audit tracking system which would track the actions taken for record purpose. If this is introduced, then this will take care of the huge tax gap that we have of Tax-to-GDP ratio of almost 79%. The complete filing and assessment process must be computerised, with proper authorization checks and internal controls built into the system. The system should provide audit trail of each and every assessment, starting from filing till completion of the assessment; even including the proceedings of the cases referred to the Tribunals and the Courts. These actions have been on the tax reform agenda for years, if not decades. The success mainly depends on the decision power and sustained implementation capacity of the political leadership. Further, transfers and postings before end of the term results in reducing staff’s competency, therefore stability of tenure of productive human resource is essential for capacity building coupled with rigorous training in the relevant fields. The Appellate Forums should be made independent from the formal and informal influence of FBR. The tax adjudication system must rest on fundamentals of independence, insulation and isolation from tax collection. The prosecution has to be separated from adjudication with gradual shift towards independence by transferring the adjudication system under the command and control of independent office or Ministry of Law or most preferable under the respective High Courts in conformity with section 10A of the Constitution. In long term, there should be a separate process in place for appointments and career management in tax adjudication system. Gradually phasing out of fixed tax, final tax and minimum tax regimes and moving towards taxation on net income basis. Putting a constitutional bar on tax amnesties providing tax whitening
opportunities for future. Tax rates to be rationalized to bring down to acceptable level to help broadening tax base. Verification of wealth of government functionaries through independent agencies and create deterrence by severe demonstrated punishment in the cases of corruption. Tackled through measures such as introduction of tax credits on production of evidence of specified expenses and cross verification of payments made for medical, real estate, food etc. Review of exemptions available in the taxation laws and bring them to bare minimum level. Being provincial subject now after 18th amendments, Federal should persuade the provinces to impose agriculture tax uniformly. Taxpayers’ rights need to be effectively protected by enacting a Taxpayers Bill of Rights to synergise effectiveness of tax reform.
The most serious problem in the structure of tax administration is that the operational management comprising inspectors, auditors and appraises mostly belong to influential families and are mainly inducted on sifarish, bribe and graft. Conversely the supervisory and policy levels of administration come through a merit-based competitive examination. The most overt consequences of inadequacies of tax administration are manifested by low Tax-to-GDP ratio. Tax culture for revival of economy Pakistan has experimented many ways to develop a robust tax culture. The reliance on amnesty schemes, shifting reliance from direct taxes to indirect taxes and on final tax regimes were the measures aiming towards improving collection of revenue alone instead of inculcating tax culture in the country. These factors coupled with many other socio-economic realities promoted the culture of non-compliance or low level of compliance in the country. Indeed, the aim should be that the tax policies are designed to ensure financing of governmental actions and to achieve sustainable basis for economic growth. The key areas requiring immediate attention are better tax education, simplification of tax procedures, creating conducive social, political and economic environment and above all relentless accountability for tax evasion by influential citizens and collusion and corruption in tax collection machinery. In order to build a nation with tax ethics, the mission of tax administration should be to recover fair taxes from all segments of the society. Proper training, motivation and education be imparted to tax officials to discharge their duties for ensuring justice and fairness in tax administration. A political environment ensuring use of revenue collection for changes in infrastructure, utility and service distribution, education and training, health concessions and above all visible discrimination in treatment to taxpayers and tax evaders can restore faith of the taxpayers in the government. Focus on information technology for improved communication network, should be the priority for capacity building of tax collection machinery. A tax system equipped with high-tech infrastructure can result in swift and transparent control. In developed economies with over 40% of population paying income tax, broad basing is perceived to streamline and rationalize tax structure by reducing tax expenditure in terms of preferential tax treatments, tax breaks, tax credits and exceptions which carry distortive impact in functioning of the economy. Tax reliefs in the form of tax credits and deductions, or tax rates that are lower than the standard rate are often called tax expenditures, because they can be equivalent to public expenditure implemented through the tax system. If the tax relief is based on sound economic reasons, the economy benefits more than its loss of revenue. These implications dictate the need for efficiency, fairness and simplicity of taxation design. A country’s specific circumstances, particularly regarding its tax revenue requirements, redistribution preferences, and the available policy options e.g scope for changes in the tax mix and level of taxes, the degree of development of the tax administration and the economic vs political gain play an important role in cost effectiveness of tax relief and efficiency and fairness of the tax system. No doubt, Pakistan needs a team of leaders like Dr. Asif Mahmood Jah who can grow, achieve and boast the image of Pakistan, and make this impossible to possible with his expertise, experience, invaluable insights, inspiring ideas, and best practices. Because before you are a leader, success is all about growing yourself, but when you become a leader, success is all about growing others. Indeed, Pakistan needs leaders, not bosses!