“If we want lower taxes for growth, then spending must be curtailed so that governments won’t need so much money. The next time you hear a politician promise another tax break for some special group of taxpayers, think how much that hurts the economy and you as a taxpayer. It’s time to simplify the system and reduce its onerous impact that undermines economic growth” — Jack M. Mintz, the Palmer Chair of Public Policy, School of Public Policy, University of Calgary, Canada. In this series, I will make an attempt to suggest some meaningful proposals related to taxation for the upcoming budget of fiscal year 2017-18. The budget is expected to be announced in the third week of May. Conventional proposals regarding changes in the existing tax system, made before the annual budget every year, have proved totally futile, even counterproductive. Unfortunately, policymakers in the past have been ignoring or sidetracking fundamental reforms needed to make our tax system fair and efficient. In the last budget for the next election, the Pakistan Muslim League (Nawaz) government has an opportunity to implement such solutions to win the support of masses. Since 2013, the government has failed to tackle the most essential issues of documentation of the economy and expansion in the number of citizens filing tax returns. The existing so-called functional system that had replaced the circle-based system has failed miserably and has rendered the Federal Board of Revenue (FBR) dysfunctional and ineffective. Lack of political will to impose direct taxes is the other important issue. The present Income Tax Ordinance of 2001 relies overwhelmingly on presumptive or minimum taxes — which are indirect taxes. These are regressive and lead to widening of the rich-poor divide. Such taxes favour the rich and mighty and make the poor poorer. On income tax, the policy of appeasement is prevailing and perpetuating despite vehement opposition from many quarters. Income tax base has been eroded substantially over the years due to measures like allowing tax evaders to whiten their money through section 111(4) of the Income Tax Ordinance of 2001 and section 9 of the Protection (sic) of Economic Reforms Act of 1992 as well as tax amnesties, increasing exemption limits, raising deductions, and lowering tax brackets. As I write these lines, many are warning me that like earlier years these proposals will also be ignored or, more precisely, discarded after reading by those who matter. In any case, one needs to raise their voice and play their role towards the betterment of the society. Last year, too, many had put forth constructive proposals for improvement in tax administration and for creation of a growth-conducive environment. When he made his valuable proposals for the tax system, my dear friend Shahid Kardar, ex-governor of the State Bank of Pakistan, conveyed his sentiments in the following candid remarks: “The three of us [he, Huzaima and myself] write just to get things off our chest, and not because we believe even for a moment that they [people sitting in the Ministry of Finance and FBR] will ever change”. I hope I will not disappoint Kardar as I make another attempt to convince the wizards sitting in the MoF and the FBR to go for structural reforms in the tax system if they sought to achieve the cherished goal of self-reliance and prosperity for all. No agenda for rationalisation of tax codes or simplification of tax system can improve tax compliance, unless there is substantial improvement in public perception regarding the system’s efficiency, technical competence, integrity and ability to relentlessly pursue and punish tax evaders, without any political interference. The present functional structure in the FBR has failed to achieve these objectives. While there is always talk of giving “market” wages to tax officials, nobody has ever emphasised improving the overall working conditions at the FBR and professional skills of its officers and staff. If one goes to a tax office as a taxpayer only then one would feel the taste of inhuman and insulting treatment meted out to an ordinary citizen. Does it really need enormous amount of money to extend respect and courtesy to taxpayers? Does this issue relate to market wages or foreign funding or advice? The writer is Advocate Supreme Court and Adjunct Faculty at Lahore University of Management Sciences (LUMS) and can be reached at ikram@huzaimaikram.com. He tweets @drikramulhaq