World Bank advises govt to bypass parliament

December 13, 2009 at 11:26 am (Economics, Pakistan)


By Sajid Gondal

ISLAMABAD: The World Bank has advised the government to bypass the parliament and implement taxation reforms through a presidential ordinance, according to a report submitted to the Federal Board of Revenue.

The report of the WB review mission, which has a mandate to review the progress made by the FBR in implementation of its recommendations for tax reforms, said that going to the parliament could result in ‘undesired consequences’.

The report said: ‘The GoP (government of Pakistan) has some options to follow in order to modify the set of legal instruments that will harmonise procedures and responsibilities and allow the integration of functions irrespective of tax types. One option is to again submit the ordinance for the president’s signature on the next recess of parliament.

‘This is a relatively fast journey in the administrative (executive) branch that within four months will require parliament’s ratification.’

The report further said: ‘Second option may be to send the package of legal reforms to parliament or include them as part of the budget submission for the next fiscal year. This will significantly delay the implementation of the harmonise procedure, but more importantly may be subject to changes in parliament that might bring undesired consequences.’

The report also said that the creation of Inland Revenue Services (IRS) in the FBR by the Establishment Division was in accordance with the term of the July agreement between Pakistan and the World Bank at Istanbul.

The Customs and Excise Group (CEG) officers in FBR had challenged the creation of IRS in the FBR by the Establishment Division in the Rawalpindi bench of the Lahore High Court.

The CEG group officers argue that the creation of a new occupational group in FBR is illegal and would affect their constitutional rights.

The case is under the consideration of a court of law, but the WB suggested FBR to continue with the process of ‘occupational service integration’.

The WB’s acting spokeswoman Mariam Altaf said the review mission report was for the use of the government, and not a public document. She refused to comment on the report.

According to official sources, the government is working on the draft of an ordinance, ‘Harmonisation of Income Tax, Sales Tax and Federal Excise Duty Ordinance’.

Official sources told Dawn that fresh amendments in the Finance Bill trough the Ordinance proposed empowering the FBR chief to issue notifications and appointments for the creation of an inland revenue service.

Under the new ordinance, all officers of income tax, sales tax and federal excise departments would be called as officers of the ‘inland revenue service’.

The Directors of Large Taxpayers Units and Regional Taxpayers Units will be renamed as chief commissioner of LTAs and RTUs.

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