Dar tries again, apparently
It does not look good for the sitting government – not the least since it built its election campaign in large part on raising taxes – that the FBR itself has been bulldozing reforms suggested by its Tax Reforms Committee (TRC) for a year. But, for appearances at least, Finance Minister Ishaq Dar has decided to have another go at revitalising the TRC; this time by constituting an oversight committee, headed by Special Assistant to Prime Minister on Revenue Haroon Akhtar Khan, to oversee implementation of urgent tax reforms.
No doubt this urgency owes to the IMF program running out next year. And Dar sb knows better than most that should the Fund’s blessings discontinue, the deficit will bloat into a very political problem by the time campaigning for the next general election gets underway. He also knows how traditional means of raising revenue – taxes and exports – have been a large let down under his watch. Now, there is a twin compulsion to push tax reforms through. Not only does the kitty need the cash, but the Fund has made a possible next program contingent upon a number of reforms, taxes and deficit being high on the list.
Yet the TRC logjam raises another important and disturbing question. If FBR was resisting reforms – so important that the government staked its campaign reputation on them – then certain members had strong personal reason to do so, or they were acting on behalf of bigger players, or both. That brings a criminal angle into play as well. If some parties are influencing the official tax collection machinery for selfish purposes, they need to be identified and made an example out of. The best way to start is to implement the TRC’s findings, all of which seem to make more sense than the present tax regime. The sooner the existing sales tax system is replaced with the proposed single-digit non-adjustable sales tax the better, and existing laws must be amended to confiscate domestic assets of bad guys who have stashed ill-gotten wealth in international safe havens, among other things. Dar sb has made another start. Whether he has the political will to see this through remains to be seen.
