Syed Shabbar Zaidi: Auditor-in-chief

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.

This article was published in the Herald's June 2019 issue. To read more subscribe to the Herald in print.