The Public Accounts Committee (PAC) in its recent meeting deliberated on a constitutional amendment barring the High Court’s from giving an interim stay in tax matters beyond six months and the introduction of law to suspend the Computerised National Identity Cards (CNIC) of “tax defaulters”. This is a problematic development. This deliberation comes as a response to the briefing given by the Chairman of the Federal Board of Revenue (FBR) to the effect that tax revenues of Rs 300 billion were trapped due to litigation in courts stretching for years. He did not give any details about the nature of the litigation, or on how many adjournments were sought by the counsel engaged by the FBR. It is obvious that the PAC had heard the FBR’s side of the story. The FBR, for many in Pakistan the epitome of inefficiency, may well be seen now as shifting the responsibility for its own failure to meet the assigned targets on to the courts. One goal of tax policy is to expand the resources, level of savings and capital formation in the private sector for enhancing investment — which, it is hoped, leads to employment generation and industrialisation. Pakistani economic managers have not only failed to achieve this goal, they are proceeding to tax the already existing taxpayers, targeting especially investments in capital market and capital gains arising out of immovable property. So, one view of the matter is that the PAC, instead of promoting a fairer tax system which is more conducive for economic growth, is instead asking for draconian measures and for giving a free hand to taxmen — all in order to show an exaggerated level of tax collection. It would be a legitimate question to ask why the PAC had not enquired from the Chairman of the FBR about the elephant in the room: how to expand the overall tax net by bringing in more tax-filers? Besides the corruption and incompetence of the FBR, there is an argument that heavy-handed tax policies have forced the business community to search for safer havens abroad, depriving the country of invaluable capital. For similar reasons, the argument runs, foreign investors are reluctant to avail opportunities for investment in Pakistan. The government shows complete apathy in providing fundamental needs of health and education, but is always keen to levy exorbitant indirect taxes — or at least such is the popular perception. Such a perception is further strengthened by wasteful public spending and a significant budgetary gap. It may well be that a significant chunk of the money stuck due to litigation could actually represent ill-advised tax assessments by the FBR. If indeed that is the case, such arbitrary tax demands force citizens to indulge in costly and long-drawn-out litigation. Until the truth is ascertained, at the very least the PAC members ought to first ask for the complete data from the FBR, and only then proceed towards decisions. *