The Federal Board of Revenue (FBR) in Pakistan has planned to buy 155 luxury vehicles, ranging from 1,500cc to 3,000cc, worth almost Rs 1.6 billion ($9.9 million) using a World Bank loan that was meant to upgrade the country’s outdated information system. This amount is equivalent to 8.6% of the funds allocated to upgrade hardware and software. The FBR has submitted documents to the Ministry of Planning for the Investment Project Financing (IPF) components, requesting nearly Rs 19.6 billion under the World Bank’s $400 million Pakistan Raises Revenue Project. This move has caused concern, as the luxury vehicles will be paid for using taxpayers’ money.
A Look into the Documents
A closer look at the documents shows that the FBR plans to purchase 155 luxury vehicles of 1,500cc to 3,000cc. The engine capacity itself, as per the FBR, is a “luxury” and is subjected to heavy taxation. Each vehicle costs nearly $47,000 or Rs 10.3 million at the old exchange rate of Rs 220 to a dollar. However, due to the dire economic crisis in the country, the value of Pakistani currency is decreasing daily, and the recent increase in prices by car assemblers suggests that the price of each vehicle may exceed even Rs 1.63 billion.
Opposition to the Purchase
The planning ministry has opposed the purchase of the luxury vehicles, and a meeting will be held to obtain the ministry’s approval before the Central Development Working Party (CDWP) meeting. The prime minister has already banned the purchase of all types of vehicles until June 2024 due to the economic crisis. The FBR plans to provide the vehicles to all field formations, with the maximum number of vehicles, almost nine, being given to the regional tax offices in Islamabad, Lahore, Gujranwala, Faisalabad, and Karachi, while some regional offices like Quetta, Peshawar, and Rawalpindi will get eight vehicles.
Other Plans for the Funds
According to the FBR, the funds allocated for the purchase of luxury vehicles will also be used to start tax compliance initiatives, including behavioural nudges and ease registration, filing, and paying taxes by reaching out to taxpayers in selected areas in phases. The planning ministry also objected to allocating $3 million for workshops, training, and staff capacity building, while the amount of Rs 320.4 million has been allocated for the operational cost of project management.
The FBR’s decision to use a World Bank loan meant to upgrade the country’s outdated information system to buy luxury vehicles has caused concern among taxpayers. The planning ministry has objected to the purchase, and a meeting will be held to obtain the ministry’s approval before the CDWP meeting. While the FBR plans to provide the vehicles to all field formations, the prime minister has already banned the purchase of all types of vehicles until June 2024.