Home Latest News FBR Restructuring Shelved after ECP Rebuke

FBR Restructuring Shelved after ECP Rebuke

Interim finance minister says incoming government will ‘operationalize’ plan developed by caretakers to raise tax-to-GDP ratio to 18% in 5 years

by Staff Report

File photo of interim Finance Minister Shamshad Akhtar

The interim government on Tuesday decided against pursuing structural reforms in the Federal Board of Revenue (FBR) after the Election Commission of Pakistan (ECP) reminded it not to exceed its mandate.

In a letter to caretaker Prime Minister Anwaarul Haq Kakar, the ECP stressed that the interim government’s role was limited to overseeing day-to-day matters necessary for a functional government and it should not desist from making any major policy decisions. The directive followed the interim federal cabinet approving significant restructuring and digitization of the FBR, amidst reservations of the institution’s senior officials.

In a televised address after the cabinet meeting, interim Finance Minister Shamshad Akhtar said the cabinet approved a restructuring plan to raise tax share in the gross domestic product (GDP) to 18 percent within the next five years. “The whole package of legal amendments, rules and regulations, as well as required administrative interventions, will be operationalized by the upcoming elected government,” she said, referring to the plan that requires 2,200 amendments, including 700 to 800 amendments requiring legislation.

She also stressed that all stakeholders agreed with the plan, which was also approved by the civil-military Special Investment Facilitation Council (SIFC). “The competence of the caretaker government to develop the proposals for restructuring and digitization of the FBR was endorsed by the federal cabinet and an implementation committee will be notified to carry out follow-up activities to prepare the required package of legislative and administrative changes,” she added.

Seeking to nullify opposition from within FBR, she clarified the plan did not call for any retrenchment of its staff, who would retain their civil service status. She said the FBR would carry out this restructuring within its existing resources and budget.

Explaining the need for the restructuring, she said Pakistan’s tax-to-GDP ratio has been declining, barely touching 8.5% in 2022-23, even as the country’s tax capacity remains around 22 percent of GDP. Taxes under the purview of provinces barely yield 1 percent of GDP revenues, she added.

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