Federal Board of Revenue (FBR) has planned to buy 155 luxury vehicles, at a cost of over Rs 1.6 billion, in the name of taxpayers’ facilitation out of a foreign loan meant to upgrade its obsolete information technology system. This was revealed in the latest report published by the Express Tribune.
The estimated cost of Rs 1.63 billion for the purchase of vehicles is equal to 8.6% of the funds that the FBR had secured for the upgradation of its obsolete hardware and software, showed official documents. The more glaring aspect of the plan is that a World Bank loan will be used to buy these vehicles in the name of taxpayers’ facilitation.
A couple of years ago, the FBR suffered one of the worst-ever data hacking incidents in its history – and yet, it has not been able to upgrade its data network.
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Details show that the FBR has submitted documents to the Ministry of Planning for the Investment Project Financing (IPF) component, worth Rs 19.6 billion, under the World Bank’s $400 million Pakistan Raises Revenue project. A deeper dive into these documents revealed that the FBR is going to procure 155 vehicles of 1,500 cc to 3,000 cc – the engine capacity that the FBR itself has described as ‘a luxury’ and being subject to heavy taxation. The FBR has not revealed the make of the vehicles in the documents.
According to details, of the Rs 19.6 billion that the FBR has demanded, a big chunk of Rs 1.63 billion, or 8.6% will be spent on buying these vehicles. FBR has estimated each vehicle to cost about $47,000 or Rs 10.3 million, at the old exchange rate of Rs 220 to a dollar. After the rupee devaluation, and the recent increase in prices by car assemblers, the total cost of the purchase might exceed much more than even Rs 1.63 billion.
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Prime Minister Shehbaz Sharif has announced plans to implement an austerity policy due to the pressing economic conditions in the country. While Finance Minister Ishaq Dar has already announced a Rs 170 billion mini-budget, his revenue arm seems to be keen on purchasing cars and using taxpayer money for its personal benefits.
The details showed that the vehicles will be distributed among all the field formations. The maximum number of vehicles— 9 each, are planned to be given to the regional tax offices situated in Faisalabad, Gujranwala, Islamabad, Lahore, and Karachi. Some regional offices, like Peshawar, Quetta, and Rawalpindi will get 8 vehicles.
The FBR stated in its documents that it plans to launch tax compliance initiatives, including behavioral nudges and facilitate registration, filing, and payment of taxes by reaching out to taxpayers in selected areas in phases, where digital access to services is weak or other geographical, social, or cultural aspects restrict traditional ways of facilitating the taxpayers. These reasons, however, do not seem to justify the purchase of 155 luxury vehicles.
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In its technical appraiser, the planning ministry has also raised objections to the FBR’s move to buy these vehicles, asking the FBR about the “need” and the cost. The ministry recommended that instead of buying these vehicles “it would be more appropriate that tax facilitation facilities be outsourced.”
The planning ministry also objected to the allocation of $3 million for training, workshops, and staff capacity building. An amount of Rs320.4 million has been proposed for the operational cost of project management (i.e., Rs30 million for the hiring of vehicles, Rs18 million for fuel, and Rs30 million for project contract staff).
The World Bank had approved the project to expand the tax base and upgrade the obsolete data networks, but the Planning Commission has observed that these goals might not be achieved within the due date – which is June 2024. According to the ministry:
“The sponsors, after a lapse of two years, have submitted the revised PC-I with new requirements of equipment and with enhanced costs. Only Rs 92 million (i.e., less than 1% of the original cost) has been utilized within two years i.e., up to June 30, 2022, therefore, the sponsors may clarify whether they will be able to utilize the remaining cost of the project Rs19.5 billion up to June 2025.”
Many had opposed the Pakistan Tehreek-e-Insaaf (PTI) government’s move to take the $400 million WB loan in the name of the tax reforms, fearing that it might also cause wastage of foreign loans, as had happened in the case of the failed $149 million Tax Administration and Reform Project (TARP). The TARP funds had been utilized to buy cars, and computers and to upgrade offices.
The Pakistan Raises Revenue money now may also be used to buy cars, computers, and laptops. The Rs 9.6 billion cost includes spending of Rs 596 million on 1,300 desktops and 600 laptops.
Full Story: The Express Tribune
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