FBR: implausible excuses

02 Apr, 2023

EDITORIAL: It beggars belief that on the one hand FBR (Federal Bureau of Revenue) says it is improving its digital services, in line with the government’s policy of enhancing automation, yet on the other it admits to lacking the basic capacity to analyse big data and detect tax evasion. Data is the new oil, as they say, and no successful operations of the 21st century, especially collecting taxes from an entire country, can be completed without leveraging the latest techniques in data mining and analytics. How, for example, can the Bureau claim to make digital services “increasingly available to all taxpayers and traders” yet acknowledge its helplessness in expanding the tax net in a country with one of the lowest tax-to-GDP ratios in the whole world?

It’s also shocking that authorities have not sought to make up for this deficiency by building necessary capacity instead of lamenting out in the open that FBR just doesn’t have the tools to do its basic job properly.

Now what’s one to make of one of FBR’s own reports which states that functional data bridges have been established with provincial revenue agencies and other state departments across the nation, such as banks/NADRA/SECP/PITB/AGPR/I-LINK/TELCOS, Punjab Land Record, etc., but the tax collection machinery cannot get anywhere with these things because it never built the capability to analyse and interpret data as needed.

There’s a lot more about this that makes no sense whatsoever. The report went on to claim that the development of ICT infrastructure and a well-resourced data analysis and resource unit – to integrate and analyse big data with adequate data security – can enhance the organisation’s capacity.

Why, then, have these things not been done so far? Could it be that while everybody in the country realises that low tax collection is at the heart of the fiscal deficit, and has caused numerous problems in negotiations with the IMF (International Monetary Fund), FBR itself as well as the ministry that it answers to remain blissfully ignorant of this reality even as the ninth review of the EFF (Extended Fund Facility) still hangs in the air and the country could well tumble into default sooner rather than later?

Surely, the government understands that there’s no more room to kick the can of reforms further down the road.

Stakeholders have been crying out loud about the importance of just such reforms since forever, yet neither successive governments nor the bureaucracy, which seems to thrive on inefficiency, have ever been too interested.

The natural result of such paralysis is an unhealthy reliance on indirect taxes, which affects lower income groups much more than the tiny better off minority, to fill the kitty and meet harsh IMF conditions to keep the aid money flowing.

The government needs to realise the urgency of the situation and immediately push the reset button. FBR must be given the training and up-gradation necessary to function in the new, modern world.

And that will inevitably require more than a passing knowledge of data analytics, given its importance in conducting all sorts of enterprise, both at the state and corporate level, in this day and age.

It’s a little surprising that the Fund didn’t include this in its strict “upfront conditions” for each tranche of the ongoing EFF.

There must also be some reckoning. If those tasked with running the nodal national agency for tax collection and leading it into the new century were instead looking the other way as it decayed, then they must be made to pay for it.

This process of cleansing would also send the perfect message to other government departments suffering from similar problems and ensure that nobody gets away with unacceptable excuses any longer.

Copyright Business Recorder, 2023

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