Sources told Business Recorder the issue of political influence during transfers and postings of tax officials was discussed during the briefing of the FBR Chairman Sohail Ahmed gave to the Prime Minister at the FBR House here.
During the meeting, tax authorities informed the Prime Minister that support of the government is needed for smooth implementation of the reform process within the FBR for which no interference is welcome in day-to-day affairs of the tax machinery.
Referring to FBR Chairman, sources said the tax authorities informed the Prime Minister about the political influence in transfers and postings on lucrative positions. "Some people might have submitted complaint to you that the FBR did not work. Such complaints are filed by the people, who wanted to post their tax officials on lucrative position, but we refused to do so," sources quoted the FBR Chairman as telling the Prime Minister during the meeting.
Sources said the FBR has sought support from the Prime Minister on overall reforms of the tax administration particularly controlling political interference during reshuffling of the tax officials. Tax authorities also sought support of the Prime Minister for convincing the four provinces to allow the FBR to collect proposed Value Added Tax (VAT) at the rate of 15 percent on services from July 1, 2010.
Responding to the FBR Chairman, Gilani assured the tax authorities full backing to eliminate corruption from the tax department. Sources said the FBR presentation on VAT focused on methodology used for collection of integrated VAT from all provinces. A detailed comparison of proposed VAT and existing Sales Tax Act, 1990 bas been presented to the Prime Minister.
Tax authorities have informed the Prime Minister that even if one province was not ready to empower the FBR to collect VAT on services it would be distortion of the entire VAT chain. The new VAT law could only be implemented in case all four provinces are fully agreed to implement Federal and Provincial VAT laws. In this regard, the FBR will also give a separate briefing on VAT to President Zardari in coming days to explain the salient features of VAT and obtaining support of all four provinces for implementation of an integrated broad-based VAT across the country.
Sources said the Prime Minister directed the FBR team to get support of the members of the Parliament for implementation of the VAT. The members of the National Assembly should be convinced for implementation of the VAT. Tax authorities were optimistic that all the provinces including Sindh will allow the FBR to collect VAT on services from next fiscal year.
The Ministry of Finance would also play its role to develop consensus among the stakeholders for smooth implementation of VAT as per agreed timelines with the donor agencies. When Gilani asked the FBR team to explain the status of VAT in India, the FBR Chairman said the VAT has yet not been implemented in India.
They are making efforts to implement VAT in India through proposed constitutional amendments in the Indian Constitution. However, we do not intend to amend the Constitution, but wanted to operate under the existing framework for implementation of VAT. It has been informed to the Prime Minister that the proposed VAT law was already referred by the National Assembly Standing Committee on Finance and the Upper House was going to refer it to its standing committee very soon.
FBR Chairman Sohail Ahmed also informed the Prime Minister about the latest break-up of revenue collection during July-February (2009-10) period. The provisional tax collection in February 2010 stood at over Rs 87 billion as compared to Rs 77 billion in the same period last fiscal year, reflecting an increase of Rs 10 billion.
It has been estimated that the revenue collection would reach around Rs 90 billion during February 2010 on compilation of final figures. Tax authorities have informed the Prime Minister that the tax collection target of Rs 1,380 billion is challenging for which the FBR is taking serious enforcement and administrative measures to improve overall revenue collection.