The Federal Board of Revenue (FBR), apex revenue authority at the federal level, symbolises an institution wrought with sleaze, wastefulness, inefficiency and corruption. The episode of blocked refund of billions, outstanding for the last many years, has confirmed how singlehandedly FBR has destroyed the growth of business, especially that of exports in Pakistan. There exists an unholy alliance between corrupt tax officials and unscrupulous businessmen that is depriving the nation of taxes worth billions of rupees and criminally shifting the burden on the weaker sections of society. But the honest taxpayers are fleeced and their bona fide refunds are denied.
The last ten years' data confirm that FBR has lost one million filers [Rational tax policy, Business Recorder, January 26-27, 2018]. There has been unabated figure fudging and manipulation to show higher collection [Truth behind revenue growth, Business Recorder, February 2, 2018]. The frequency of frauds has also increased manifold [Sordid story of tax frauds, Business Recorder, February 1-3, 2013]. A report carried by Business Reorder of May 14, 2006 revealed a mega tax fraud case. The Supreme Court rejected the bail application of Raja Zaraat, a former clerk of Customs Department, who had been wielding far larger financial clout than "originally estimated" in getting billions of rupees as tax refund on forged documents. The report disclosed that although the first complaint against the accused was received by FBR in December 2005 yet it took no action until May 4, 2006 when he was arrested in Islamabad. It was obvious that this colossal tax fraud was not possible without the connivance of tax officials. FBR never made public, the details of the case and whether the defaulting officers were punished or not.
The Supreme Court in Suo Moto Case No.16 of 2010 after considering Report on ISAF Container Scam by Office of Federal Tax Ombudsman and One-man Commission Report of Ramzan Bhatti, ex-Member Customs, passed strictures and highlighted recommendations of Commissions it formulated but till today no action has been taken against the culprits. It is worth mentioning that Supreme Court of Pakistan in its order of March 4, 2013 in CMA No.2243 & 3683 of 2012 in SMC No.16 of 2010 held: "The performance of the FBR, as indicated by the report, now submitted is far from satisfactory. Despite a lapse of almost one and a half years since the Report was compiled by the Federal Tax Ombudsman, no progress worth mentioning has been made for the recovery of the loss identified, which is regrettable". Now seven years have lapsed and it appears that Supreme Court has also lost track of its order.
Unprecedented frauds mentioned by Federal Tax Ombudsman (FTO) in its report 'Smuggled Vehicles Amnesty Scheme-2013' dated February 14, 2014 are still a mystery for public as FBR never revealed to the public about who were involved and what actions were taken to recoup the tax losses. A news report of June 9, 2014 claimed that "the 'Computerised Risk-Based Evaluation of Sales Tax' detected "around 250 to 300 persons involved in a massive scam of sales tax evasion by showing dummy business transactions to claim illegal input tax adjustment, causing huge loss to the national kitty". What action was taken by FBR is not known till today. In November 2017, according to a report, case of alleged smuggling of cell phones surfaced as well as wrong claim of refund of about Rs 740 million. It is reported in media that a senior Customs official who recovered the smuggled mobiles worth over Rs 500 million and detected the refund frauds was transferred instead of getting appreciation or reward.
It is an undeniable fact that FBR has been brutally abused by successive governments in Pakistan. The high-ranking postings in FBR are made by the rulers of the day to serve their interests. History shows that a number of FBR's high-ups have always served the "interests" of their political masters. They have always played the role of more loyal than the king. The case of awarding contracts to SGS-Cotecna for kickbacks using the Chairman FBR's office presents a classic study in this regard. It shows how FBR's high-ups deprived the nation of billions of rupees to please their masters. In the process, of course, they made a "fortune" for themselves as well. Till today, the government could not extradite many high-level officials who fled the country after plundering the nation's money. The case in point is ex-Chairman FBR involved in massive corruption and declared proclaimed offender by a competent court. It is a matter of record that one Chairman of FBR was declared a proclaimed offender in a criminal case. Yet another joined hands with the rulers of the day for issuing notifications for the benefit of their industrial units.
There are numerous cases to confirm that due to FBR's policies of favouritism under the command of various Chairmen, national exchequer suffered losses of billions of rupees, yet the mighty NAB released one of them after arrest, removed his name from the Exit Control List and later on even Shaukat Aziz, Prime Minister-cum-Finance Minister inaugurated his brokerage house at Islamabad Stock Exchange. The so-called process of accountability has proved to be yet another farce in Pakistan vis-à-vis the episode of the arrest and release of ex-Chairman FBR, who was equally popular with PPP and PML-N! He loyally served both the regimes and after retirement was running many a lucrative business.
The political-patronising saga of FBR continues even till today and therefore it is understandable why mass-scale evasion of taxes exists-it is not possible without the connivance of tax administrators. The tax-evaders, their advisers and tax administrators together constitute a mafia that has made Pakistan a haven for tax dodgers and plunderers of national wealth. Even our legislators, through a Protection of Economic Reforms Act, 1992 and section 111(4) of the Income Tax Ordinance, 2001, have been encouraging 'unscrupulous people' to bring as much money as they want into Pakistan through normal banking channels. Under these laws, no question about "source" of such remittances can be asked. This facility, the government claims, is vital for "revival of economy". Such a lethal prescription for revival of economy has destroyed the entire social fabric of society. The result is mafia-like operations and collaborations between the tax administrators and the drug barons, criminals and tax evaders.
Tax officials holding key posts are directly connected with these people. They design and get implemented policies for "mutually-beneficial" relations between them while the whole nation is a silent spectator. The frequently appearing amnesty schemes and much immunity given in the tax laws testify to it. The outcome is a total destruction of our socio-economic system (we are witnessing ever-increasing rich-poor divided, chaos and lawlessness). The rich comprising mighty businessmen-turned-politicians, tax evaders, drug barons and corrupt officials are ruling Pakistan while the rest of the people are merely a helpless lot. The policies of appeasement towards politicians-cum-industrialists, unscrupulous traders and businessmen are obviously not without any personal interest. The policy-makers are properly "compensated" for these acts of 'kindness'.
Things have not changed even after elections of 2001 and 2013 paving the way for civilian governments. In fact, harsh, illogical and unfriendly tax policies continue for the poor while the mighty get exemptions and generous concessions. Behind the scene, unprecedented benefits are secured for tax dodgers, criminals, plunderers of national wealth and drug barons in the name of "excellent financial policies"-even NAB cannot probe the cases of sugar mills responsible for creating artificial shortage and minted money.
The honest taxpayers are discriminated when these undesirable elements get extraordinary tax concessions and tax-holidays. And even after these privileges, they get away with hoarding and other malpractices eg from stealing electricity to heinous crime of dumping their industrial waste into canals and public places. As if it was not sufficient, they can get all their dirty money whitened by just re-routing it through so-called remittance-channels. They just need to hire the services of a money exchange house and the rate for whitening the black money is as low as 2 to 3 per cent. Despite this, our politicians and bureaucrats sitting in FBR talk of broadening of tax base and improvement of tax-to-GDP ratio! If we want to survive as a respectable nation, we need to counter this trio of corrupt politicians, businessmen and bureaucracy. Our economic development depends upon forming efficient tax collection machinery, manned by skilled personnel, professionals and headed by thoroughly scrupulous persons.
(The writers, lawyers and partners in Huzaima, Ikram & Ijaz, are member Adjunct Faculty of Lahore University of Management Sciences)
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