Illustration by Maria Huma
Syed Shabbar Zaidi has helped many rich
businessmen pay as little tax as they could. Now, as chairman of the
Federal Board of Revenue (FBR), he needs to extract the maximum from
them.
For four decades, he has worked as a chartered accountant at one of
Pakistan’s top accountancy firms, A.F. Ferguson, having risen through
its ranks to become its senior partner in 2014. His clients have
included several former and serving ministers and at least one former
prime minister. His long experience in dealing with their tax returns
will certainly help him in his new job.
He will also face a huge conflict of interest as soon as he goes
after some of his former clients. Should he use his insider’s knowledge
of how they avoid and evade taxes (in which case, he will be
compromising the trust his clients posed in him); or should he let them
off the hook even when he knows that they have either been misusing tax
laws or violating them altogether (in which case, he will betray his
current mandate)?
Either way, it will be Zaidi’s loss. If he gets to make his former
clients pay as much tax as they must, his accounting career could be
over for good. If he does not, his stint as the FBR chief could be
short.
Zaidi will also be wary of many of his own past utterances. As a
known public intellectual of our times, he has spoken at literature
festivals, given presentations at seminars and conferences, written
newspaper articles and taken part in innumerable television discussion
panels on matters concerning business and economy. It will not be so
difficult to find one or more of his past sound bites to denigrate one
or more of his current policies.
He is already experiencing some of that over the tax amnesty scheme
that has been announced almost simultaneously with his elevation to the
top FBR job. His 2018 book,
Rich People, Poor Country, is being cited to show that he was highly critical of a tax amnesty scheme launched by a previous government last year.
“In our society, we expect welfare of the masses without paying
taxes,” he once wrote, advocating an enlargement of the tax bases and a
reduction in the propensity to squeeze more money out of the existing
taxpayers. Yet, tax measures being announced under his watch do not look
like they are likely to change this situation.
As is also clear from the title of his book, Zaidi has always
displayed a healthy disdain for unearned wealth and inherited
entitlement. On more than one occasion, he has held Pakistan’s political
and business elite responsible for generating a divide between the rich
and the poor. This gap looks set to grow in the coming months and
years, as is evident from the increased indirect taxes reflected in the
latest hike in fuel prices which will hurt the poor much more than the
rich.
Zaidi’s well-known criticism of the stranglehold of international
financial institutions, such as the International Monetary Fund (IMF),
is equally likely to echo among his critics when new tax measures are
announced in the coming federal budget. If Pakistan’s parleys with IMF
are anything to go by, he will be implementing the very tax policies
that have been enjoined upon us by those very institutions.
Zaidi’s other major problem is that he is an unwelcome outsider in
the government bureaucracy. Through a petition at the Islamabad High
Court, one FBR officer has already challenged his posting as illegal.
Zaidi has vowed not to draw salary or other benefits from the public
exchequer but that will not resolve the legal issues over his
appointment.
His work experience at a firm with a few dozen employees also does
not automatically qualify him to run a tax administration that has
several thousand staff members. His previous stints with the government
have been insignificant, if not entirely irrelevant — a brief tenure as
Sindh’s caretaker finance minister in 2013 and a few advisory positions
in various public sector entities and departments.
To add to his woes, he has been tasked with meeting the highest-ever
tax collection target in Pakistan’s history, estimated to be 5.5
trillion rupees, over the next 12 months or so. His allies and critics
will be watching him closely as he goes about achieving this task.
If he succeeds and, thus, justifies his appointment, he will prove
what he has written in his book: that Pakistanis can and must pay more
taxes. If he fails -— well, that is what everyone is betting on.