Analysis: Integrity and tax reforms

The caretaker government has recently announced its decision to separate Pakistan Customs and Inland Revenue Services (IRS). This action has reignited the rivalry between these two tax groups, leading to a renewed exchange of rhetoric after a gap of 14 years. Back in 2009, a significant reform separated sales tax from customs, and its operation was handed over to the IRS. Despite facing opposition, the government went ahead with this move. Subsequently, both groups established departments aimed at facilitating career progression. However, it is important to note that the expected outcomes of these reforms have yet to materialise and remain largely theoretical. Background interviews and talks with top officials from both tax groups demonstrate their tax groups’ career possibilities and successes. Instead of improving the tax-to-GDP ratio, enforcement, and compliance, the discussion focuses on why certain policies seem to benefit some individuals while placing others at a disadvantage. The revenue target for FY24 falls short of paying the country’s debt servicing commitments. Given the current economic climate, can our nation afford to finance debt repayments through loans while disregarding vital development projects? Any suggested reforms must prioritise generating revenue over interest to meet our nation’s financial requirements.