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The Honurable President

Islamic Republic of Pakistan


  • Tax administrators should be given powers to enforce tax laws and not to vary or modify them to negate the principles enshrined in Articles 77 and 162 of the Constitution. Tax laws should be framed and enacted through the constitutional process and their proper enforcement is to be ensured by tax administration. All segments of the society should adhere to the rule that nobody is above law. In Pakistan, tax laws are meant only to fleece the poor for the luxuries of the rich. The privileged classes pay no taxes on their collossal incomes and wealth but the poor are subjected to all kinds of oppressive taxes. Adding insult to injury, they get nothing in return—even deprived of protection to their lives and property, what to speak of basic facilities of health, education, transport and housing.  

162. Prior sanction of President required to Bills affecting taxation in which Provinces are interested: – No Bill or amendment which imposes or varies a tax or duty the whole or part of the net proceeds whereof is assigned to any Province, or which varies the meaning of the expression “agricultural income” as defined for the purposes of the enactments relating to income-tax, or which affects the principles on which under any of the foregoing provisions of this Chapter, moneys are or may be distributable to Provinces, shall be introduced or moved in the National Assembly except with the previous sanction of the President.”

  • Revisiting of National Finance Commission (NFC) Award: The issue is not of merely devising a fair formula for distribution of the net proceeds of the taxes, but the revisiting of Articles 142 and 160 of the Constitution vis-à-vis bringing the less privileged and under developed areas at par with big sprawling cities.
  • The Centre, at present, is transgressing on the constitutional right of provinces by levying income tax on gross value of many services/contracts and then out of divisible pool gives funds that otherwise exclusively belong to them. Depriving provinces of the right to levy sales tax on goods is the fundamental flaw of our Constitution. It was available to them before independence. The Constituent Assembly took away the right of levying sales tax on goods from provinces with the promise to give it back as soon as financial position of Centre improved—a promise that was never fulfilled and in the 1956 Constitution, “tax on sales and purchases” appeared at Serial No.26 of the Federal Legislative List making it a federal subject.
  • Balochistan should get “net proceeds” on natural gas and Khyber Pakhtunkhwa on electricity, as envisaged in Article 161(1)(a) & (b) of the Constitution. Their present share in sales tax from divisible pool is as low as 9% and 14% respectively. They have rich natural resources and wealth of oil, gas and electricity but due to low population get a small share for goods they produce. The same is the case for Sindh. Punjab is the only beneficiary of the existing distribution of taxes under Article 160—it gets a lion’s share of 53% (for 2017-18 it was Rs. 1.2 trillion).
  • For reforming the outdated and outmoded tax machinery, we need comprehensive structural reforms. The Federal Board of Revenue (FBR) needs to be run by a competent Board as a short-term reform measure before it is finally merged into National Tax Authority [NTA]. In the long-term, Pakistan must have single tax agency that collects taxes as well as disburses benefits like social security, food stamps, universal pension and income support etc. The linkage of database of various bodies with NTA (complete digitization) will be a great step towards e-government model for the country that is presently non-existent. The mode and working of NTA can be discussed and finalised under Council of Common Interest [Article 153] and its control can be placed under National Economic Council (NEC)[Article 156].
  • In view of Article 167(4), the role of NEC has become very important though it has yet not been realised by the centre and provinces. In this perspective, we should also discuss the idea of NTA. FBR has been persistently failing to meet budgetary targets for the last many years what to speak of realising the real revenue potential. In fact, FBR has become a tool in the hands of businessmen-turned-politicians in getting enormous tax benefits through the infamous Statutory Regulatory Orders (SRO) system.
  • The planning, in the post-Eighteenth Amendment period should be federalised rather than centralised. But nobody has raised this issue. The Eighteenth Constitutional Amendment has redefined NEC on the pattern of Council of Economic Interests (CCI). The NEC forms part of the Chapter 3 of the Constitution entitled ‘Special Provisions’. Before the Eighteenth Amendment, Article 156 related to the NEC had two clauses.
  • The Eighteenth Amendment gives provinces equal rights over their natural resources. Article 172(3) confers 50 percent ownership of hydrocarbon petroleum resources to the provinces. The subject was earlier held by the federal government. There still exist legal and administrative bottlenecks for implementing this provision.
  • In representations under Article 32 of the Federal Tax Ombudsman Ordinance lies with you and these are being rejected on the ground that alternate remedy is available. In fact, in maladministration cases alternate remedy principle does not apply. Rejection from your office, has rendered the office of the Ombudsman redundant.

Submitted on November 13, 2018 by:

Dr. Ikramul Haq

Huzaima Bukhari

Huzaima & Ikram
167-G/I, Johar Town, Lahore, Pakistan
Tel: (W) +92 42 35300721, 35304421 & 35304420 (direct)
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