Daily Times

“The customer always comes first” is the principle that is practised by all businesses because they know if their customers aren’t happy and satisfied then they would not be able to generate much revenue. When it comes to a country like ours where major revenue is derived by the imposition of different types of taxes, the question arises that whether the Federal Board of Revenue [FBR] being the tax administrator has ever thought if their customers who are the taxpayers, happy, satisfied and trust them? If they are, then why are people reluctant to go for voluntary compliance and why do we have to rely more on indirect tax revenue sources? Although, it is not being said that “The customer would always be right too!” when it said, “The customer always comes first.” We need to think and analyze the reasons behind the serious trust deficit of taxpayers on FBR and try to bridge the gap too before it is too late. Without a doubt, good treatment of taxpayers would increase voluntary compliance. We should stop considering our taxpayers as “Tax Evaders” always which is the case with most of the notices issued by FBR. Why in Pakistan we don’t bother to compare the practices of our FBR with the “best practices” of other tax administrators of the world like the IRS of the USA, HMRC of the UK, etc.? Have we ever done the cost-benefit analysis of having such a large tax machinery? And how much additional revenue is derived through enforcement measures? Let us now discuss how can we transform and restructure our tax administrator.

The time has come for the rebranding of the FBR as all the efforts through other measures would go wasted if the perception is not changed in the taxpayer’s mind. For this FBR can be renamed, the logo can be changed, the staff at FBR could be asked to wear a particular badge per their grade, etc. The tax policy should be separated from the tax administration which should be a separate function not coming under the domain of FBR resultantly, it is not used as a tool to get more taxes whenever a shortfall occurs.

Good treatment of taxpayers would increase voluntary compliance.

Treating taxpayers as your customers can be done by when taxpayers are treated with respect, they have better facilities to sit and wait for their turn instead of waiting for hours outside the tax officer’s office. Many times, taxpayers arrive on time, however, they are informed that the concerned officer has not yet arrived which means that proper attendance machines should be installed to monitor the staff’s timings. A system of tickets could be in place, including obtaining an online appointment through a website with the concerned officer so that no time is wasted. There should be an option to have an online meeting on platforms available to save time and cost too. In addition to this, when a taxpayer’s profile is logged in, complete details of officers dealing with his cases along with their images should be there so that he understands who is dealing with his cases which could save time in finding out who is dealing with what and their locations, etc. Moreover, often unreasonable delays are there in case of genuine exemptions, sometimes to ensure extra documentation or to meet the targets by delaying the same which irritates the taxpayer and should be avoided. When the tax officers would consider taxpayers as their customers then they would also not go for undue harassment to the taxpayers.

As a tax administrator, the FBR should give significance to its human resource function. When we do not have the right mix of people in the FBR then problems would continue. The process of hiring can also be outsourced to an independent reputable HR firm that could assist FBR in hiring people. Whoever does that, it should be purely on merit. The pay scale of the staff should be above market instead of market competitive so that they don’t go after unethical practices. The performance should not be based on the revenue they collect, rather there should be other qualitative factors too that should be considered in their appraisals. Instead of stressing the staff with the quantitative targets, it should be the responsibility of the board of the FBR to formulate such policies which derive more revenue. Considering the impact of technology in every matter, the training of the existing staff should be done in such a way that they are aware of data sciences, artificial intelligence, etc. Whereas new and specific hiring should also be done to cater to these needs. It should also be considered that some sort of internship etc. should be provided to the staff in FBR before their placement in it so that they are well versed with all the procedures and practices.

Another important aspect of bringing reforms would be to make the best use of technology and artificial intelligence. It should be considered that pre-populated applications should be there on web portals to bring ease for taxpayers. There should be a help button at every stage which should guide about what and how is to be filled. Why in this era of technology, the portal cannot show the pending cases, outstanding refunds, and tax position summary in general? Why can’t a taxpayer have the import stage tax details on MIS at the IRIS website and why same have to be accessed through e.FBR website? Why can’t FBR, with the assistance of federal and provincial governments do an effort to sync all the tax-related information of a taxpayer in one place which is easily accessible too? Even today too there are lots of mistakes in tax return forms every year which are then corrected by different tax bars and associations etc. Ideally, anything being planned to be issued should be issued at least three months in advance to take feedback from all the stakeholders and to correct them on a timely basis before the final draft is issued. In short, user-friendly administrative systems and procedures should be in place.

Besides this, taxpayers must be educated in simplified and convenient ways. For instance, the latest version of ordinances, acts, rules, etc. should be timely updated with recent changes on the website. The law updates should be sent to the taxpayers’ registered email addresses and intimated over their registered numbers. The FBR should make an effort to present every situation via practical cases, scenarios, and examples so that it is easier for taxpayers to understand the same. The video tutorials should be issued discussing the matters and compliance things at length. To keep taxpayers involved in the process too, they should be asked for timely and frequent feedback beforehand to make them feel that they are the main stakeholders. It is recommended that all the above matter initiatives could be taken in at least two languages, Urdu, and English. Moreover, people responding from the helpdesk should be well versed with the related matters, so they can respond to queries.

Another important issue that results in revenue shortfall is the prevailing corruption which needs to be curbed. This can be done by mystery shopping through independent firms that identify issues and report to the board of FBR. Meanwhile, whistleblowing should be encouraged, and an e-portal for grievances should be formed. The complaints lodged should be looked after by an independent firm that should report the progress to the board of FBR. Besides this, strict checks should be kept on tax officers who practice despite there being open instructions of not doing so and an eye should be kept on assets of tax officers and their close family members to identify any unusual movements which should be probed accordingly.

There could be several other recommendations that could be quite helpful in transforming FBR as per the modern needs and best practices followed by other tax administrators. However, the need of the day is that these proposals are also implemented categorizing them in short-term and long-term measures so that the benefits could also be derived.

The writer is a tax expert, researcher, and corporate trainer. He has studied International Taxation from the Chartered Institute of Taxation in the UK and is also a member of the Institute of Chartered Accountants of Pakistan (ICAP). He can be reached at mmuzammil309@gmail.com