The suggestion was made on 23rd August 2012 on a complaint filed by a Lahore-based tax lawyer and to date the FBR has neither filed a request for review to the FTO nor sought the President's representation under section 32 of the FTO Ordinance which stipulates that "the Revenue Division or any person aggrieved by a recommendation of the Federal Tax Ombudsman may, within thirty days of the recommendation, make a representation to the President who may pass such order thereon as he may deem fit".
The core function of FTO, as per its website, revolves around, "Disposal of complaints of tax maladministration promptly, justly, fairly, independently investigated, and to rectify any injustice done to a taxpayer by actions of the tax employees of Federal Board of Revenue (FBR)/Revenue Division, Government of Pakistan." There is no doubt that the amount of leakage from the FBR during the discharge of its core function of tax collection is considerable.
Estimates place this amount at over 500 billion rupees per annum, an amount considerably in excess of the foreign loans/assistance that the government seeks to balance its rising budget deficits at great cost to not only what several critics maintain its ability to formulate an independent foreign policy that is in the national interest but also with the dramatic rise in foreign loans (doubling the amount of external indebtedness in under five years) the government has compromised its very ability to repay the interest and the principal as it falls due on foreign loans procured in the past.
The FBR routinely complains that it is merely an implementing authority for decisions that are taken elsewhere, specifically in parliament. Thus it absolves itself of all kinds of blame for not ending exemptions on the rich and influential and developing a tax system that is fair, equitable and non-anomalous.
In addition, several tax officials accuse the taxpayers of being dishonest and understating their income - a charge that many taxpayers dismiss by arguing that massive leakages from the tax machinery is the only mitigating factor in their attempts to hide their true income from the tax officials. And rightly argue that when the FBR is given the opportunity to implement a decision that would increase the tax to Gross Domestic Product ratio, as the FTO decision with respect to the restructuring of PRAL indicates, the FBR drags its feet. These are valid criticisms of the FBR and one would hope that it would take serious cognisance of the FTO recommendations with a view to prompting implementation.
What is of serious concern however is the fact that the Public Accounts Committee chaired by Nadeem Afzal Gondal has requested the FBR to investigate the FTO as the possible source of the recently leaked report to a non-government organisation (NGO) that identified the names of several prominent parliamentarians who were allegedly evading taxes. It is mind-boggling that the PAC would seek the FBR to investigate FTO instead of challenging the concerned NGO in a court of law to seek redress. According to the FTO website, the Ombudsman's institution in Pakistan does not compete with the courts, or act as a further body to which those unsuccessful in the courts can appeal.
Be that as it may, it is essential for parliamentarians to accept that by granting themselves exemptions and not filing their income tax returns accurately they leave themselves open to severe criticism, which may well have political implications for them in the forthcoming election. In addition, even though the FBR operates under the Ministry of Finance yet in reality it is the people of this country who pay the salaries of FBR staff through taxes and their ultimate loyalty must be to the public which demands a more proactive engagement with proceeding against rich and influential tax-evaders.