Ethical dilemma on

Public ethics versus business ethics

Submitted By:
Muhammad Salman Noor
(17-MPA-E-49)

Submitted To:
Prof. Dr. Aamir Saeed

IAS University of the Punjab

Subject: Comparative Public Administration

Class & Section: MPA & (B)

Session: 2017-2019
Introduction FBR
The Central Board of Revenue (CBR) was made on April 01, 1924 through
institution of the Central Board of Revenue Act, 1924. In 1944, a complete Revenue
Division was made under the Ministry of Finance. After independence, this course
of action proceeded up to 31st August 1960 when on the suggestions of the
Administrative Re-organization Committee, FBR was made a connected
bureau of the Ministry of Finance. In 1974, further changes were made to streamline
the association and its capacities. Therefore, the post of Chairman FBR was made
with the status of ex-officio Additional Secretary and Secretary Finance was
alleviated of his obligations as ex-officio Chairman of the FBR.
So as to expel obstructions in the activity of regulatory forces of a Secretary to the
Government and viable plan and execution of financial arrangement measures, the
status of FBR as a Revenue Division was reestablished under the Ministry of Finance
on October 22, 1991. However, the Revenue Division was annulled in January 1995,
and FBR returned to the pre-1991 position. The Revenue Division keeps on existing
since from December 01, 1998.
By the sanctioning of FBR Act 2007 in July 2007 the Central Board of Revenue has
now turned out to be Federal Board of Revenue.
Vision
To be an up-to-date, advanced, operational, self-governing and trustworthy
organization for enhancing revenue by providing superiority facility and
encouraging compliance with tax and related laws.
Mission
Improve the ability of the tax system to accumulate due taxes through submission of
modern techniques, providing taxpayer support and by creating a motivated,
satisfied, enthusiastic and specialized workforce.

Tax Administration Reforms Project

The Tax Administration Reform Project (TARP) tries to help the reforms started by
the government for improving tax administration. The superseding objective is to
raise revenue tax through improved consistence with tax laws and broadening of tax
base; improving adequacy, responsiveness and proficiency of tax administration
through institutional and procedural changes; improving accumulation through
straightforward and brilliant assessment administrations; and reinforcing review and
requirement systems.

Sector Issues before the TARP

Regardless of past reform efforts, huge numbers of the long-standing inadequacies
in tax administration have not been redressed. The tax department has experienced
significant institutional shortcomings identified with poor administration, powerless
HR, low pay, absence of satisfactory frameworks of money related and physical
control, low quality and quantity of the tax auditors, unduly bureaucratic procedures
with unnecessary extension for circumspection and lease looking for by individual
staff, weakening physical foundation, absence of straightforwardness in the
accumulation of import obligations, and protection from reforms. Other basic
inadequacies include; poor identification of non-filers and stop-filers; poor audit
program design, implementation, and sequential follow-up; poor use of database for
cross checking; and absence of tax transit and audit/inspection controls in customs.

The low tax to GDP proportion in Pakistan is primarily due to inborn shortcomings
in the tax system framework including;
(I) Wasteful tax administration
(ii) A narrow tax base
(iii) Skewed tax structure
(iv) Complex and non-transparent tax system
(v) Corruption and tax avoidance.

Project Description
The proposed Project will help the Government renovation the tax administration
system. It would help activity to review real weaknesses in tax administration
through interest in human resource and data innovation like information technology,
modernizing collection and review methods, cultivating deliberate consistence, and
fortifying the institutional system for tax enforcement. The Government is focused
on crucial change of institutions, motivators and responsibility to breakout from an
endless loop of high rates, savage administration, tax avoidance and low incomes to
an upright cycle of lower rates, evenhanded duty structures, reasonable organization,
willful consistence and higher income. CBR change is an imperative mainstay of
Government's more extensive methodology for transforming open division
organizations. Comparative changes have additionally been started at the State Bank
of Pakistan, Securities and Exchange Commission of Pakistan, WAPDA, and the
Office of the Auditor General.

Further addition, the Government with Bank help in procedure of setting up a wide-
running open segment limit building program which expects to improve the ability
base of its key services, agencies and regulatory bodies in an effort to introduce
broad based civil service reforms.
Objectives
The Tax Administration Reform Project (TARP) tries to help the changes started by
the government for improving tax administration. The abrogating objective is to
raise tax income through improved consistence with tax laws and widening of the
tax base; improving viability effectiveness, responsiveness and productivity of tax
administration through institutional and procedural changes; improving gathering
through straightforward and top quality tax services; and consolidate audit and
implementation techniques.
This Project pursues the fruitful completion of an IDF Grant which was stretched
out to the Government in 2000 to encourage improvement of execution plans for
institutional change of CBR. TARP help the continuation and compelling usage of
the reforms started to improve the ability of the tax system. In particular, project
objectives include;
 Improving organizational efficiency and effectiveness of revenue
administration
 Promoting compliance through strengthened audit and enforcement capacity
and transparent and high quality tax services
 Improving trade facilitation through modern and internationally acceptable
customs procedures
 Improving integrity and fairness of tax administration
Cost of the project
Type (Total amount) (US$m)
Borrower ($23.10)
IBRD ($24.40)
IDA ($78.50)
UK: British department for international development (DFID) ($23.00)
Total Project Cost: $149.00

Neo Public Management

This project was introduced by the World Bank for the reforms in tax system. This
project is based on western country culture norms and principles. The main objective
of this project is to improve and make the efficient system of tax administration. This
project was fully funded by the World Bank.
The main point is that through this project want to impose policies, rules and
regulations of taxes on the Pakistani people to support the government to generate
the tax revenue in efficient manners. Because in Pakistan there was no effective
system, there was no authentic record of tax payers, filer and non-filer. Through this
project the government want to reforms in tax system with the collaboration of
World Bank.
In 1767, during colonial era Parliament also enacted the Townshend Duties, taxes on
paper, paints, and glass, and tea, goods imported into the colonies from Britain. Since
these taxes were levied on imports, the British thought of them as
"external" taxes slightly than internal taxes such as the Stamp tax. Tax was collect
from poor people and the rich exempt. There was no proper record of tax system.
Tax system was not systematic and computerized. So, this was the need of time to
introduce the effective and efficient system for tax administration because tax is the
main source for government to generate revenue. To proper record, proper
documentation, computerized and online system is required to improve this
efficiency.
Profit maximization versus citizen (Ethical Dilemma)
This project was basically introduce to facilitate the public, and there
issues about tax system. But instead of facilitating this project to public,
they create problems for public. They make their main concern to make
maximum profit.
They not consider the public ethics, public issues, public rights, they just
treat the public like customers. They make the policy and implement on
the public. This policy is prepared by World Bank. We are living in
independent country. But we adopt the policy of western cultural which
is make in World Bank. World Bank funded this project and make
desirable policy, even this policy was not favorable for our country.
Our country has different values, different cultural, different norms and
regulation, so how it possible to make policy for our country even they
don’t know about our values, cultural, norms and regulation.
In Pakistan there is 58 percent literacy rate. Mostly area of population is
not known to use the technology, and how to use online system. So how
it possible to get desirable outcome to ignore the ground realities.

Analysis
After taking the interview form senior management of FBR at CRTO Tax
House, Tax House، Nabha Rd, Anarkali, Lahore. I asked many questions
about Tax administration reforms project and I receive approximately
same answers from the senior management.
Mr. Khalid Hussain (Assistant director CRTO Lahore)
Mr. Imran Zaidi (Inspector CRTO Lahore)
Mr. Kashif Mehmood (Staff Officer Commissioner CTRO Lahore)
I asked main relevant questions about TARP. Mr. khalid Hussain briefly
describe me about TARP. He said that this project was basically start for
the tax reforms but we face a lot of problem after this implementation.
The main problem is that this project is 100 percent based on computer
system and technology and the one other main issue was the audit. In FBR
there is not conduct the audit for last many years. There is not proper
record of tax system. People are not aware how to become filer and how
to deposit file return. Mr. Imran Zaidi tell me about TARP that our
Pakistani culture is different from western cultural, he also said that this
project was adopt from Australian society, our society is different, here is
literacy rate is low, people are not aware about technology. Mr. Kashif
Mehmood also share his view point that the main issue to not get desirable
outcomes are that our top management priorities is to make maximize
profit. They don’t care about public ethics and behave. People of Pakistan
irritated form this system.
The ethical dilemma of this project is to make maximum profit by invest
a huge amount in the project but the public is not facilitating, the project
is flopped in 2012 due to not receive the desired outcomes. Without
planning to impose this project on public and not take care about the
public behave and public virtue, after the implement of the project, there
are create a large number of issues. Like mostly people haven’t
information of technology. Every day FBR launch new policy and give
them the name of tax reforms. Now public is not ready to trust and rely
on FBR due to every day change tax policies.
My last view point of this project is that instead of getting finance from
World Bank and impose the policy of western cultural, make sure and
identify the problem and issues by own research. Keep in mind the
country cultural, public behave, public virtue and values. Through this
method we will be achieve our target outcomes and facilitate the public in
real manners.
 Transcription
Topic

TAX ADMINISTRATION REFORMS PROJECT

(TARP)

Interview Venue: FBR Regional Tax office, TAX

Nabha Raod, Anarkali, Lahore.

Interviewer: Muhammad Salam Noor

Class: MPA (Mater in Public Administration)

Interviewee: Mr. Khalid Hussain

(Assistant Commissioner CRTO Lahore)

Mr. Imran Zaidi

(Inspector CRTO Lahore)

Mr. Kashif Mehmood

(Staff Officer Commissioner CTRO Lahore)

Mr. Khalid Hussain

Q. Kindly tell me your designation and job responsibilities?
Ans. I am an Assistant director at RTO Lahore. My main job responsibilities are to
look after the tax matters. Ensure compliance of filing statutory returns, statements,
maintenance of prescribed accounts, documents and records. Impose penalty and
take other actions under the law against non-compliers.

Q. Please tell me about the project of Tax administrative reforms, Introduction?

Ans. This project is basically launch for the efficient system of tax department. To
make sure the proper record tax payer, to avoid the tax defaulter, to avoid corruption.
Before this project manual system was exists but there was too much issues which
FBR and public were facing. Through this the overall system is going to established
on computerized.
Q. What is the reason behind TARP?
Ans. As I discussed above, there was corruption in manual system, rich people had
strong relations to exempt the tax. There was not proper mechanism of tax record.
The other reason about identify the figure of tax payer, filer and non-filer. Through
this the focus on the accountability that the separate entity how much tax paid and
what they paly role to serve the society in real manners.
Q. What are the issues which FBR faces before TARP and after the TARP?
Ans. Yes, there was several issues which the FBR was faced. Long time procedure
was the issue, manual system, not exact identify the figure. But the after TARP till
the FBR faces many issues. Like system errors, speed, not knowledge of technology
by the public. They still hire consultant to return the files on high paid.
Q. Is this project beneficial for public? What the issues which public face?
Ans. Yes, project is beneficiary for public. But there is still lake of awareness. Public
is not aware about tax, that how much beneficial for them and for their generation.
In the European country they are aware that how much this is important.
Q. How much objective achieved through this project?
Ans. We faced many issues after the implement of this project. But many objectives
we achieved. (Not discussed in detail)
Q. Can you tell me about its funding, cost of TARP?
Ans. Funding was from World Bank and about cost you can google. I haven’t exact
idea of cost.
Q. How much this project is helpful after the implementation?
Ans. Because this system is fully depend on computer based. These results are good,
effective and efficient.
Q. Do you think that this project is matched with our Pakistani cultural, norms and
behave?
Ans. We have issue of education. People are not ready to pay tax as they consider it
expense. But in reality this is investment, which is indirectly invest on them to make
their life better. As you know tax is the main source of earning.
Q. Is this project is favorable or not for public?
Ans. I think you can find now, and you can better answer this question.
Thank you so much for your precious time sir!
He said: This is good step that now our young generation and students want to
get information on tax department as this is the basic element of revenue. This
is also our duty to aware our belongings about tax benefits. I wish best luck for
you!

Mr. Imran Zaidi

Q. Kindly tell me your designation and job responsibilities?
Ans. I am inspector in RTO Lahore. My job responsibility is providing guidance
about and applying taxation legislation examining financial accounts and related
documents managing junior clerical and technical staff investigating potential fraud
cases via interviews, visits and research writing reports representing HM Revenue
& Customs (HMRC) in disputes brought before the tax commissioners managing
budgets and resources agreeing settlements in person or via written correspondence
with taxpayers or their representatives(accountants and lawyers).
Q. I want some information about TARP? Can you tell me in detail about this
project?
Ans. This is the project launch by World Bank to improve the effectiveness and
efficiency of the tax department. To make the accountable and transparent system.
Because our tax system was manual so that was the need of time to make reforms in
tax department.
Q. Is this project is good for tax reforms in the history of FBR?
Ans. Yes, in past there was not authentic and proper system for tax collection system.
Corruption was involved to disturb the tax system. After this project the system was
integrated and effects are fruitful.
Q. What the issues which public is face before this project?
Ans. System was working manually. Not record the proper figure of tax. Rich and
poor concept emerge. Rich peoples are not ready to pay tax. They show low income
and also paid low tax to department. Mediocre class public face problems. The
officer go to them and imposed desirable tax charge high penalties.
Q. Is this project is helpful to facilitate the public for tax purposes?
Ans. Yes, this project is very helpful to facilitate the public. Through this system
launch online sites, and people get information from the side by their own at any
time. They can calculate by own their tax figures.
Q. Do you think this project make positive reforms in FBR system?
Ans. Yes, positive response. Because this system generate more revenue and
collection to the government. But the issue which face and close this project is to
systematic issues faces a lot. System software was not strong and daily thousands of
the complaints emerge. So, this need to time to make more reforms in FBR tax
administrative system.
Q. Can you tell me the psychological effects which public face? Positive or negative?
Ans. Because this reforms was basically impose to collect the revenue but people
face a lot of problems. System fault, audit issues, technology issues.
Q. Mr. Khalid sab is too much polite man. Do you think after the TARP there is need
of further project?
Ans. Defiantly, this is need of time to reforms and make good and effective system,
So I thinks this is good practice to make reforms time to time when need, because
our vision is to make effective and efficient system of tax and also to facilitate the
public.
Thank you sir for your time!
He replied: Nice meeting with you
Mr. Kashif Mehmood
Q. Sir, as I interviewed with Mr .Khalid Hussain and Mr. Imran Zaidi, I want to
know from you about tax reforms in FBR?
Ans. Tax reforms basically improve the moral of public and make the system of FBR
transparent and effective. Responsible person is liable to play his part in this system.
Through the reforms we can avoid the corruption, miss use of authority, breach the
system of Vadaira shahi and saith culture.
Q. Do you think public facilitate from this project as described in policy?
Ans. Every reforms and policy has their advantages and disadvantages both. Public
is defiantly facilitate but due to some our societal issue we could not found the
outcome which should be actually happened.
Q. What are the issues currently FBR face?
Ans. Daily basis reforms irritate the public. Public is not ready to accept daily basis
changes in FBR polices and reforms. People wait a lot to deposit the tax in banks.
Bank staff is not good treated to public. Due to penalties. These issues which the
public is facing.

Q. As you are working here with FBR, Can you tell me about effective and efficient
reforms in FBR that will get desirable outcomes?
Ans. Yes, in Pakistan the mostly people are not aware about tax benefits and they
don’t know about their advantages. People think this like a penalty. So, if you create
the concept that it is our investment, then our moral will increase and also efficiency.
Q.FBR is the main institute of the government, do you think that should we use the
project and policies of western cultural?
Ans. Yes, we can use. Because if you adopt the polices and project of developed
countries then defiantly it impose good results on our system.
Thank you Sir, for your time.