- Planning Commission calls for review of spending amid government austerity measures
- FBR defends acquisition of 179 vehicles, citing operational necessity across diverse terrains
ISLAMABAD: The Planning Commission has expressed reservations regarding the purchase of 179 vehicles, including 15 fully bulletproof units, under the Federal Board of Revenue’s (FBR) Rs41 billion Revenue Raises Project. It has urged a reassessment of the Rs2.237 billion expenditure in view of the Finance Division’s austerity directives.
The project, financed by a $150 million World Bank loan at 2.5% annual interest over 30 years, is a key component of the Prime Minister’s plan to reform the FBR. Despite strong economic metrics—with benefit-cost ratios between 42 and 70, and an internal rate of return (IRR) ranging from 130% to 195%—the Planning Commission highlighted weak oversight, especially concerning vehicle procurement.
“The proposed Rs2.2375 billion for acquiring 179 vehicles, each costing about Rs12.5 million for Digital Enforcement Units, lacks detailed specifications,” the Commission noted, urging justification of this spending “in line with Finance Division’s austerity measures.”
In response, the FBR defended the vehicle purchases as vital for operational effectiveness across varied terrains where digital enforcement stations will be set up.
“These vehicles meet only the essential specifications required for effective fieldwork, excluding luxury features. Their selection strictly serves the functional needs of anti-smuggling operations,” the FBR stated. The project is slated for completion by June 2027.
The initiative’s investments in ICT hardware are expected to save approximately $100 million in nominal terms when accounting for operational and maintenance costs. The FBR stressed that upgrading data centres and network equipment is critical to preventing system failures, warning that delays could result in rebuilding costs of about $200 million.
The Planning Commission highlighted that the project aims to reduce customs clearance time at borders from 97.5 hours to 48.5 hours. It reiterated the high benefit-cost ratio and IRR, reinforcing the project’s financial viability.
Launched in 2017, the reform programme seeks to raise Pakistan’s tax-to-GDP ratio from the current 10% to 17%, still below the Asia-Pacific average of 19.3%. However, with the national accounts’ base year revision, this ratio is expected to drop further. The Commission also pointed out that 64% of economic activity remains undocumented, causing substantial revenue losses.
Pakistan’s tax system was described as overly complicated, with numerous taxes burdening businesses. “Even small enterprises incur compliance costs around Rs250,000,” the Commission said. It also noted cash circulation in Pakistan is 28%, compared to 18% in India and 17% in Bangladesh.
To address these challenges, the Planning Commission called for reforms to simplify tax procedures, reduce levies, and speed up digital integration of tax administration with the wider economy.
The project includes mobile tax facilitation services, efforts to boost taxpayer compliance, and the creation of a technical consultation forum with provincial tax authorities for harmonisation. Capacity-building, upgrading backup power, control rooms, and monitoring systems are also planned.
Recently, the FBR unveiled strategic plans for both the Inland Revenue Service and Pakistan Customs, focusing on digital transformation across value chains, tracking technologies, and implementation support.
A total of 37 digital enforcement stations will be established, including 24 along the Indus and Hub rivers with three mobile units acting as a protective barrier, and 10 at key checkpoints in Balochistan.
The Customs Tracking System will be linked with existing databases to identify individuals or vehicles involved in smuggling, ensuring duties and taxes are collected.
The FBR projects that its reforms will generate an additional $81 billion by the fiscal year 2028-29. The project also covers replacement of outdated ICT infrastructure, cloud services, software licenses, data warehousing, business intelligence tools, and full LAN and VoIP connectivity for field offices.
Alongside vehicles, the Rs2.237 billion budget includes procurement of 350 bulletproof jackets and helmets for operational staff.
The FBR justified its expanded resource requirements by highlighting a fourfold increase in tax filers—from 1.5 million in 2017 to over 6 million by June 2024—and the growing use of third-party data to widen the tax base and detect defaulters.
