Tax collection and the challenges like socio-economic and institutional constraints faced by tax authorities in developing countries can be termed as ‘tax wars’ fortheir economies. International organizations like the World Bank and IMF always keep an eye on the taxation system and the malpractices in it while disbursing loans to any country.
Broadening the tax base, avoiding tax erosion, tax evasion and controlling malpractices in taxation system are topics,often found in the tax related publications available for download from the World Bank website.
‘A Handbook for Tax Simplification’on the World Bank website briefly elaborates the question ‘What is the role of the ombudsman in tackling corruption and addressing taxpayer complaints?’in itschapter’Corruption and Tax Simplification’ on page 171.
This document deems it necessary that there must be anticorruption institutions that can monitor the activities of the tax administration and protect the rights of taxpayers.It states “institutional safeguards outside the tax administration include an independent and effective judiciary, external reviews by government agencies (such as independent external audits), taxpayer associations that strengthen citizens’ voices, and independent grievance redressing institutions such as ombudsmen”.
In the beginning of the 21stcentury,Transparency International pointed out cases of corruption in the fiscal sector in Bangladesh and therefore,former Finance and Planning Minister of Bangladesh M. Saifur Rahman was expected to place a Tax Ombudsman Bill in the parliament during the next fiscal year (2005-06).
According to the Daily Financial Express of Bangladesh, the World Bank, had long been pressuring the Bangladeshi government to appoint a Tax Ombudsman and had suspended US$ 200 million of the Development Credit Support during June – July 2005 for the government’s failure to appoint a Tax Ombudsman in time. The Bangladeshi government took hurried steps to enact the Tax-Ombudsman Act in July 2005.
A document ‘Handbook on Dispute Avoidance And Resolution’ on the United Nations website presents a review of the practices of the Tax Administration and Tax Ombudsman in its member countries.
The importance of independent Tax Ombudsman is narrated in this document by citing article 75 of Tax Code Model of Inter-American Center of Tax Administrations (CIAT) which states “The entity of Taxpayers Defender shall be created in the form of a public entity independent from the Tax Administration, in order to guarantee the timely assistance, respect for the rights of the taxpayers and customs users and fair assistance and processes in Tax Administration performance of their legal functions” .
The Federal Tax Ombudsman Secretariat at Islamabad has started a public awareness and advocacy project to reach existing and prospective taxpayers. The objective is to inform them about the free of cost, Complaint Redress System to provide relief to the aggrieved taxpayers
Similarly an article ‘How Can an Excessive Volume of Tax Disputes Be Dealt With?’ the legal department of the IMF website elaborates the need of an Tax Ombudsman in these words “The office of tax ombudsman, which has been introduced in a number of jurisdictions, can help assure a smoother interaction between tax officials and taxpayers, thereby also helping to resolve disputes or prevent disputes from arising. It solves problems in a less adversarial way than by means of litigation. This is the most typical role for this institution, by which it might affect the protest/appeals procedures, putting an end to the dispute when it succeeds in bringing both parties together”.
The above-mentioned instances stress for having an independent organization to monitor the tax authorities formal-administration.However if the Tax Ombudsman office is going to be of value, the taxpayers have to know about its role and mandate. A publication ‘Strengthening the Ombudsman Institution in Asia’ of Asian Development Bank states “Institutional independence will be a lost cause if information about the institution’s relevance, usefulness, credibility, and authority to deliver is not widely disseminated. Ignorance restricts the institution’s ability to move from a closed to an open system, from a reactive to a proactive forum, and from a relatively unknown to a known and respected institution”.
The Federal Tax Ombudsman Secretariat at Islamabad has started apublic awareness and advocacy project to reach existing and prospective taxpayers. The objective is to inform them about the free of cost, Complaint Redress System to provide relief to the aggrieved taxpayers.The FTO’s relief providing mechanism is a preferred complaint redressal option for the aggrieved existing and prospective tax payers. It has some considerable merits as it is;
fast (complaints are decided within 60 days), citizen friendly, congenial and
reformatory; rather than adversarial, simple, easily understandable and devoid of legal jargon. Moreover, aggrieved parties are not required to hire counsels for pleading their cases before the Tax Ombudsman, there is a stipulated timeframe for the disposal of cases filed with FTO Offices. Hence, complainants are not subjected to suffer indefinitely as is the case with the formal judicial system, the FBR or its lower offices against whom the order is passed by the FTO has only one appeal to the President of Pakistan, against the opportunity of filing multiple appeals in higher courts in the formal judicial system and the complainants do not fall prey to adjournments of hearings as the cases are decided promptly in a few hearings.
The writer is Media Manager at Federal Tax Ombudsman Secretariat Islamabad.
Published in Daily Times, September 29th 2018.