Pakistan shifts tax policy-making from FBR to Finance Division, creating a new Tax Policy Office to oversee reforms, accountability, and future budgets.
A Major Policy Shift in Tax Governance
The government has made a historic step of handing over the tax policy to the Finance Division, replacing the Federal Board of Revenue (FBR). This reform introduces a distinct division between tax collection and tax policy-making, a separation that economists and stakeholders have long sought. In the future, all tax-related strategies will be designed and stipulated by the new Tax Policy Office of the Finance Division, starting with the development of the next federal budget.
Senate Committee Session Reveals Details
The announcement occurred at the Senate Standing Committee on Finance meeting, chaired by Senator Saleem Mandviwalla. According to Finance Minister Muhammad Aurangzeb, the transformation of the FBR is being personally supervised by Prime Minister Shehbaz Sharif, who receives periodic progress reports. The transition is part of a broader range of institutional changes aimed at enhancing accountability and efficiency in the Pakistani tax system.
New Tax Policy Office and Advisory Board
The Finance Division verified that the Tax Policy Office is almost fully manned and will have the backup of an advisory board. Such a board will comprise the parliament, the private sector, and fiscal experts to facilitate inclusive and transparent decision-making. The goal is to create economically viable and socially just tax policies.
Concerns Over FBR’s Handling of Orders
The Senate committee also expressed concern over the way the FBR had addressed a presidential order. The Attorney General, Mansoor Usman Awan, was also present at the meeting, and the participants condemned the FBR for opposing the President’s direction before the Sindh High Court rather than acting on it. Lawyers claimed that the FBR was required by law to follow the orders of the President, the Prime Minister’s office, and the Ministry of Law, but it did not. The Attorney General was requested to intervene and solve the case.
Economic Updates and Positive Signals
In better news, Finance Minister Aurangzeb highlighted some recent achievements, including the punctual settlement of the Pakistan Eurobond, which has been seen as a positive indication of increased financial discipline. He also provided reports on the talks with China regarding a 250 million Panda Bond issuance, which is expected to be issued before the end of November, as part of an overall 1 billion investment package aimed at helping Pakistan stay afloat economically.
Accountability and Governance Priorities
These updates were hailed by committee members, but it was noted that a good governing body needs institutions such as FBR to honor presidential and ombudsman directives. The shifting of the tax policy burden is regarded as one of the steps toward diminishing the conflict of interest and enhancing transparency in fiscal management in Pakistan.
