Taxpayers’ Bill of Rights

Dr. Ikramul Haq

The Prime Minister of Pakistan, Imran Khan, has repeatedly asserted that Pakistanis are hesitant to pay taxes with the same zeal as they act as philanthropists. The main cause identified by him is mistrust between the taxpayers and tax agencies as well as the failure of successive governments to spend the taxes prudently for the welfare of the masses. This diagnosis is not novel! The real issue is how to remedy the situation. This is where the Government of Pakistan Tehreek-i-Insaf (PTI) falters as even after almost 18 months in power, it has failed to make public any plan for ending this distrust, promote tax culture and assure the masses that taxes shall be collected fairly and their fundamental rights will not be violated.

Many attempts in the past to restore the confidence of the masses in Federal Board of Revenue (FBR) through various means have failed though local and foreign funded programmes were undertaken and many task forces, expert committees and even commissions were constituted. The biggest failure was not introducing Taxpayers’ Bill of Rights that no foreign lender/donor ever suggested in any of its papers and plans. The failure of all reform programmes was partly because of the fact that no attention whatsoever was given to protect the rights of taxpayers while innumerable new obligations on taxpayers/citizens were imposed and this process continues till today.

The draft of Taxpayers’ Bill of Rights was prepared for the first time in 2014 by a sub-committee, constituted by the Federal Tax Ombudsman (FTO). Thereafter, the Tax Reforms Commission (TRC), after 18 months of its establishment, also presented the same in its final report submitted in February 2016. However, until today no practical step has been taken to implement it. It is worthwhile to mention that the report of TRC was marked “confidential” by the last government and thereafter implementation committee constituted for it also never raised this issue. Unfortunately, the report has yet not been made public, despite tall claims by the PTI Government that it believes in right of citizens to access information, which is now guaranteed by Article 19A of the Constitution of Islamic Republic of Pakistan [“the Constitution].    

In the wake of publication of draft for ‘Taxpayers’ Bill of Right by FTO that can be seen at http://www.fto.gov.pk/userfiles/file/advisory_committee_report.pdf, FBR also on its website posted ‘Taxpayers Charter’ posing as if it was their original work without acknowledging that it emanated from the office of FTO. After posting the ‘Taxpayers Charter’ (http://download1.fbr.gov.pk/Docs/2018629146495149TaxpayersCharter-1.pdf), FBR made no effort whatsoever to include it in any Finance Bill. This shows their seriousness in the matter. It is time that PTI Government makes the report of TRC public and considers the draft of Taxpayers’ Bill of Rights, contained in reports of TRC and FTO for enactment after following the due procedure provided in the Constitution.

It is worthwhile to mention that internationally the issue of taxpayers’ right has assumed a renewed significance. Recently, ‘The Observatory on the Protection of Taxpayers’ Rights (OPTR) is established to “operate as a neutral, non-judgemental platform for monitoring developments concerning the effective protection of taxpayers’ fundamental rights in the world”—details can be seen at https://www.ibfd.org/Academic/Observatory-Protection-Taxpayers-Rights.

According to Amsterdam-based International Bureau of Fiscal Documentation (IBFD), “the OPTR’s work is relevant for governments, taxpayers and different international organizations on human rights. It demonstrates the link between human rights and taxation and raises awareness as to the potential impact of an excessive tax burden or the execution of administrative or judicial processes where these rights are limited or ignored. It further added that “the OPTR will identify principles, minimum standards and best practices for the effective protection of taxpayers’ rights in the ambit of tax relationships and will also allow the permanent monitoring of global compliance with such minimum standards, as well as their amendment and development in the different regions of the world (defining whether such may qualify as either a universal or regional standard)”.

Pakistan must follow OPTR and make all-out efforts to introduce the best global practices and standards to safeguard the rights of taxpayers if the Government of PTI is serious in promoting tax culture, which it keeps on claiming it repeatedly.

In recent years, collection of taxes has assumed enormous significance in Pakistan. There is a national consensus that our survival as a self-reliant nation now lies with investment, human resource training, growth and industrialization. This alone can substantially increase tax revenues that we should not waste on unproductive expenditure but on development of infrastructure, human resource and delivery of all social services to the masses.

The citizens in general and businesspersons in particular view the “zeal” and “enthusiasm” of the FBR and other tax agencies, at federal and provincial levels, in collecting taxes with suspicion and distrust. There are a number of reasons for this reaction. Firstly, the excessive use of powers, inflated tax demands, highhandedness, maltreatment, discourteous behaviour, maladministration, inefficiency and corrupt practices etc. All these have created a general atmosphere of distrust between the taxpayers and the State. Secondly, the successive governments have failed to utilise the taxpayers’ money in a prudent and transparent manner providing them basic entitlements universally accepted and part of the Constitution what to speak of bringing prosperity and welfare for the entire nation. The ruthless waste and plundering of public money by the rulers is one of the prime reasons for the public not to comply with tax laws. Besides, these are too complicated for them even to understand.

The draft of Taxpayers’ Bill of Rights, prepared in 2014 by the FTO and later presented by the TRC in its report is comprehensive but further debate on it must be initiated both in public involving all the stakeholders and in Parliament through the defined procedure provided in the Constitution to make it more refined and assuring the masses that taxes collected from them is a sacred trust and would exclusively be used for creating a welfare state as per principles enshrined in the supreme law of the land.  

The present situation of antagonism between the tax collection agencies and taxpayers needs to be reconciled through a democratic process and implementation of taxpayers’ bill of rights. The goals fixed under Pakistan Raises Revenue (PRR) Project, estimated at US $1.6 billion, of which financing by World Bank is $400 million, cannot be achieved through handpicked experts (mostly coming on donors’ dictates) who are completely oblivious to the mundane realities of Pakistan. The bad faith, antagonism and mistrust prevailing between the government and taxpayers can only be removed through a process ensuring a just and fair tax system in Pakistan for which the blueprint and roadmap is available, and we need no foreign funding. The only thing lacking is political will to debate, promote research on the various challenges and find out workable solutions. This process will certainly require some time. Meanwhile, PTI Government in order to restore the confidence of the taxpayers should immediately start the process of enactment of Taxpayers’ Bill of Rights.     

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The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS)