Rashid Langrial, Chairman of Pakistan’s Federal Board of Revenue (FBR), has proposed that the government introduce a compulsory retirement policy for low-performing officials across all levels of government. This suggestion comes after the Economic Coordination Committee (ECC) pointed out that increasing salaries for all employees would not lead to improvement in tax collection unless performance is linked to revenue results and performance bonuses.
Langrial raised this proposal during a recent ECC meeting, where his plan for providing incentives to FBR officers, which had already been approved by Prime Minister Shehbaz Sharif, faced strong opposition.
The FBR has stressed that successful tax collection depends on various factors, including tax culture, digitalization, documentation, and the efficiency of tax authorities. The proposed performance management system is designed to encourage tax collectors to focus on fair tax assessments and improved tax collection efforts. The system is structured around two main criteria: officer integrity and performance in their specific duties. The proposal includes significant pay differences between high and low performers, with top performers potentially earning up to four times their basic salary, while the lowest performers could receive no bonuses.
To make the system more effective, Langrial suggested that performance bonuses be distributed quarterly instead of monthly. The financial implications of this new regime would include Rs. 2.474 billion for the last six months of the current financial year (January to June 2025), and Rs. 5.44 billion for the next financial year, which includes a 10% salary increase for officers.
The proposal also includes a special allowance for officers in the Reform Delivery Unit, which was established to implement the FBR’s transformation plan approved by the Prime Minister in September 2024. This allowance would amount to Rs. 54 million for the current year and Rs. 79.2 million for the next year.
Langrial emphasized that the new performance management system would replace the existing rewards system, except in cases of exceptional achievements. The FBR has sought approval from the ECC for these proposed measures to be implemented starting from October 1, 2024, with the first performance assessment to be completed by January 2025.
