Revenue is the lifeline of any organisation. The current economic situation of Pakistan is the failure of successive governments, whether democratic or undemocratic, to fulfil their commitments of implementing effective taxation policies. Moreover, an inefficient tax authority acts as catalyst to exacerbate the situation, ultimately promoting a culture of tax evasion.

Senior bureaucrats and advisers end up doing more damage than deliver the benefit for which they are employed and equipped with almost two to three decades of experience of being in the government machinery. One key reason is the tendency of reactive approach to resolve crisis situations. This may alleviate the symptoms of failure of the revenue policy and the supporting administrative infrastructure in the short term, but fails to cure the underlying core problems over an extended period of time. Hence, an extensive reconstructive surgery is required to save the country from its critical condition of lagging behind in revenue generation.

A glaring example of a reactive policy is the Tax Amnesty Scheme in Pakistan. This is a desperate attempt to boost revenue collection and will not succeed in hoodwinking the inefficiency and incompetence of the tax collecting machinery. The only internationally successful method to generate revenue is to address tax planning through a comprehensive multidisciplinary approach directed at both: tax policy and tax administration.

It is high time that we made the routine cosmetic changes and reform the tax system. There are two critical objectives that must be addressed on top priority. Firstly, widening the tax base and secondly, increasing the tax collection. To achieve these objectives, we need to develop a strategy, which will at the very least help us dissect our problem so that we can understand it properly.

There are several problem areas that contribute to low levels of tax collection.

Firstly, the tax policy itself must exhibit a sense of fair play and justice by charging greater taxes to the wealthy indulging in luxurious lifestyles along with the high-income salaried earners.

Secondly, management issues in the revenue department need to be resolved.

Thirdly, where the field of Information Technology provides the latest software and hardware to facilitate documentation and transparency; appropriate planning must precede impulsive implementations to exploit information management, audit and control aspects to optimise the efficiency of these systems.

Fourthly, public awareness and tax education of all professionals must be planned over short, medium and long term to develop a culture of taxation by inspiring a sense of responsibility in every earning resident of Pakistan to contribute his or her share to the running of this country.

Last but not least, the callous use of the revenue generated by governments within our indigenous cultural paradigm is a major challenge. The satisfaction to every taxpayer that his contribution to the national exchequer will be used honestly and sensibly in well planned projects, and will not be wasted in unnecessary lavish expenditures or corrupt practices, will encourage others to join the tax net.

Any government strategy that fails to address these components will fail to deliver the desired boost in revenue collection.

The most essential factor is to identify and understand the problem and its root cause before jumping to solutions. Why are the notices issued by the tax officers not served? What happens to the concealment cases initiated? What percent of these mature into tax generation and in what span of time? Why has the number of total returns filed in 2011-2012 dropped to 1.3 million as compared to 1.965 million filed in 2010-2012? What is the attrition rate of trained and experienced CSS officers from FBR? How many officers of Grade 17 and above were sent on foreign trainings? How many completed their degrees and left FBR? How did this individual learning add to the organisation’s business intelligence?

Unless ground realities are researched and established to explain why people behave the way they do, any desperate attempt to improve the current situation will just be a futile exercise.

The writer is a former member of Civil Services of Pakistan, and change management consultant and a public sector management analyst. Email: drsaniachaudhry@gmail.com