Fiscal justice can reduce costs of doing business in Bangladesh
Pakistan's Federal Tax Ombudsman chairman provides useful clues to reform our tax regime to ensure fiscal justice for domestic and foreign investors
The proportion of tax payment is a major concern for individual citizen and business enterprises alike. Such concerns multiply each day due to our public expenses increasing by an average of 10 percent each year, which the government levies from tax payers by increasing tax input.Concern over taxes also adds further to our existing worries with respect to the difficulties in setting up power and communication facilities as well as the myriad of bureaucratic hurdles that an entrepreneur must face before venturing into a new business. As the rules of doing business become uniform around the world under the impacts of globalisation, tax-related worries are likely to dominate our business efforts much in a manner similar to the developed world. Justice (retd) Saleem Akhtar heads the Federal Tax Ombudsman of Pakistan, an independent body created three years ago to oversee the efficacy of Pakistan's taxation regime. The Ombudsman recommends reforms and stern actions against tax evaders and the 'rouge' elements in the government who act in concert to fleece the nation of much needed public funds levied from taxes. The Ombudsman also serves as a point of appeal for both domestic and international investors by redressing grievances and pitfalls in a judicious manner. Bangladesh and Pakistan having similarities in laws and regulations, the Pakistani Ombudsman seems replicable to bring about some reforms in our taxation regime. With that aim, Justice Akhtar's expertise was shared recently during his visit to Dhaka under the auspices of the Bangladesh Enterprise Institute (BEI), that had organised a sectoral workshop on 'Customs and Taxation.' We excerpt from Justice Akhtar's conversation with the Daily Star's Senior Assistant Editor, M. Shahidul Islam. The Daily Star(DS): How similar are the taxation laws between Bangladesh and Pakistan? Justice(retd) Saleem Akhtar(JSA): I haven't gone through all the taxation laws and regulations of Bangladesh, but laws are almost similar in the two countries. Even India has similar laws. DS: What are the major differences, if any? JSA: Very little. DS: Our government often fails to meet its tax collection target and ends up with budgetary shortfall. What is the reason for that? JSA: Excessive assessment comes first. Often wrong assessment is done by taxation officials while tax payers conceal real taxable income. DS: Was the Federal Tax Ombudsman in Pakistan created by a statute? JSA: Of course. It has the approval of the parliament. DS: How much improvement has taken place in Pakistan's taxation system since the Ombudsman came into being three years ago? JSA: A lot. Our system has been praised by the American Bar Association. Internally, the Federation of Pakistan's Chamber of Commerce and Industries has praised the system's effectiveness. Industrialists and other business entities say the Ombudsman benefits them in a number of ways. DS: What are the specific fields in which such improvements were affected? JSA: You see the 1922 taxation act contains guidelines for assessment. But corruption, nepotism, bribery, irregularity and wrong assessment have made the taxation regime a very corrupt one. The Ombudsman I lead checks and investigates into such irregularities and recommends disciplinary actions against corrupt tax officials and tax evaders. DS: Did it improve the collection system too? JSA: Yes. It improved the entire tax management regime, including the tax management administration. We have brought about necessary reforms in many fields. DS: Does it require change of law to reform the system? JSA: Yes, sometimes. Once we discover anomalies and if rectification is needed, we change relevant laws. DS: If we wish to commission a similar Ombudsman in Bangladesh, shall we create the ombudsman first or conduct a study to identify the problems? JSA: We already know what our problems are. They include collaboration between tax officials and tax- payers to deprive the government of expected taxes. Then there're irregularities, wrong assessment, lack of training and motivation, etc. 122 countries have improved their taxation system through Ombudsman. DS: Are those countries developed, developing, or mixed? JSA: Mixed. DS: What is the secret of an Ombudsman's success? JSA: The Ombudsman works independent of the government and of the tax - payers. It enforces laws without favour and to the letter and spirit. The Ombudsman even changes the working environment and employs extra resources to make the system efficient. DS: Did you face any major obstacles so far? JSA: Yes, some corporations were concerned about the way we went into assessing corporate taxes. Some corporations complained that the amount owed to them by the revenue department was not paid back. As an independent body entrusted with the responsibility to investigate, diagnose and enforce laws, we're overcoming those problems. DS: What is the duration of the Ombudsman you lead? JSA: We have a fixed term for four years. The laws require of me not to engage in any other profession with the government of Pakistan after the term expires. DS: How an Ombudsman can cut the cost of doing business? JSA: If foreign investors think they're unjustly taxed for doing business in our countries, they have a place to go to and seek remedy to any of their grievance or observation. On the other hand, if, for example, goods are stuck in the ports of entry for unusual time, the cost of export/import goes up. This cost is borne by the consumers ultimately. The Ombudsman is a public good in all sense. It reduces custom delay and cuts costs. In case any businessman feels aggrieved, he can always come to the Ombudsman and register a complaint. DS: Did you receive any complaint so far from any foreign investor? JSA: Some multinational companies did register complaints with us. We solved their problems in a judicious manner and the Vice President of the International Chamber of Commerce told me that they were happy with the solution we offered. The Ombudsman dispenses FISCAL JUSTICE to all. It also acts as a bridge between the tax- payers and the tax administration authorities. Once the mistrust is removed, the system performs much well. DS: Did you find the Bangladesh Enterprise Institute's study on 'Cutting cost of doing business in Bangladesh' useful? JSA: It was very useful. All countries of the region can be benefited by this study. DS: Did you find our government receptive to this idea of creating a Tax Ombudsman? JSA: Yes, Bangladesh may introduce an Ombudsman soon.
| 
