FBR Vigilance Wing's wings clipped

A Business Recorder exclusive reveals a disturbing though by no means surprising fact: the Federal Board of Revenue (FBR) is no longer obtaining clearance from the Vigilance Wing of the Directorate General of Intelligence and Investigation (DGII) prior to transferring or posting tax officials at key positions. The term key position is defined as a location where the capacity for misuse of a tax official's discretionary powers are considerable with the implicit element of harassment of either an honest taxpayer or collusion with the taxpayer to defraud the treasury. Pakistani taxpayers have consistently maintained that FBR officials' discretionary powers must be curtailed with the objective of ensuring that their capacity to harass an honest taxpayer and compel him/her to collude is compromised. In this context, there is an urgent need to ensure that the Vigilance Wing (DGII) is not rendered dysfunctional in terms of carrying out an audit on its staff and efforts must be made to ensure that it is allowed to play its due role in rooting out corruption and thereby increasing tax revenue. The Vigilance Wing, the report further reveals, is in existence but has stopped work on integrity management of tax officials. Instead, it is focused on income tax refund fraud, concealment of income and under-reporting of taxes of those few who are registered in this country. In effect, the Vigilance Wing is focused on ensuring that the taxpayers do not wilfully defraud the treasury which the FBR may well claim would also tackle corruption of tax officials. However, to effectively combat corruption in the FBR there is a need to ensure that tax officials are audited by the Vigilance Wing and those apprehended are punished and not appointed to lucrative posts that would only increase the leakage from the system. The FBR has, over the years, been subjected to much criticism by both ministers/politicians and members of the general public for corruption. The slow and cumbersome investigation process that accounts for few dismissals/penalties for corrupt tax officials, needs to be looked at and strengthened. This is all the more critical as the FBR has rarely met the budgetary targets that are set each year, which accounts for a burgeoning budget deficit that is fuelling inflation in the country. While granted that the FBR is an implementers of tax policies that are announced in the budget by the ruling party and approved by the parliament, or in other words, the elected representatives bear full responsibility for the tax exemptions to the rich and influential, yet FBR has to be held accountable for its own laxity in dealing with corruption within itself. To add insult to injury last year the Chairman of the FBR, who had held the charge of Secretary Finance previously, announced a year-end revenue collection that was gross instead of net - an announcement designed to appease the International Monetary Fund staff that the deficit would be on target but which further compromised the credibility of the FBR. At the time the Chairman offered to resign and investigation to fix responsibility was announced. Nearly seven months later, the FBR has yet to announce the results of that investigation. Most organisations these days have their own internal integrity/vigilance divisions. Multilateral such as the World Bank and the IMF, as well as national institutions like the FBR, do have internal audit processes/mechanisms which must be rendered fully operational being in the interest of the entity itself and the people they purport to serve. Copyright Business Recorder, 2012