Daily Times

It is welcome news that the Federal Board of Revenue (FBR) is prioritising reduction in the cost of doing business for the budget of fiscal year 2021-22. And there is no doubt that getting rid of excessive taxation and slashing compliance costs are essential steps in that direction. Yet it remains to be seen if the optimism of FBR Member Inland Revenue Operations Muhammad Ashfaq Ahmad was justified when he said at the Karachi Chamber of Commerce and Industry (KCCI) the other day that such steps would set businesses free by reducing their interaction with tax authorities.

There is no doubt that less interaction with tax officials would give industries more room to focus on expanding businesses, etc, but he should not forget that such steps sometimes in the past have led to another set of problems. For reducing such interaction can often make the little contact that does take place much more problematic. Tax officials long used to getting their palms greased in return for just doing their job fret at such reforms and have been known to adjust quite ingeniously at times. Therefore it is not how much you can limit the interaction between taxpayer and tax collector, rather how best you can devise mechanisms to monitor it.

There’s no better example for us to learn from than our all-weather neighbour China. Since Beijing got the Belt and Road Initiative (BRI) rolling, of which the China Pakistan Economic Corridor (CPEC) is a small but integral part, it has also successfully removed all sorts of hurdles in the ease of doing business in China. Pakistan, on the other hand, has made a number of starts over at least the last 30 years but always come short for one reason or another. The Chinese were right in working on this problem before working on their ambitious plan because so long as there are unnecessary hurdles in the way of businesses no economic uplift or financial integration plans are going to bear fruit. One can only hope that FBR means what it says this time. But for even a very remote chance of success the government is going to have to take the lead in this matter and make sure that the entire process is put under the microscope all throughout the reform process. *