THE Federal Board of Revenue (FBR) has implemented a fully digitised new performance management system (PMS) that promises transparency and efficiency in judging tax officers’ integrity and quality of work.
The system replaces the existing performance management regime, which last year rated 98 per cent of officers as ‘outstanding’ or ‘very good’, raising questions about its credibility.
Prime Minister Shehbaz Sharif, during a visit to the FBR in April, officially launched the system and directed the Establishment Division to replicate it across all federal services. The indigenously developed PMS evaluates officers — from Grade 17 and above — every six months and categorises them from A to E, using anonymous peer reviews from 45 colleagues.
Under the new framework, Rs3-4 billion annually has been earmarked for cash rewards, distributed instantly to officers based on digital ratings.
Tax officers share concern over system’s fairness amid ‘forced ranking, vague integrity matrix, delayed results’
FBR Chairman Rashid Langrial said 98pc of tax officers received ‘outstanding’ or ‘very good’ ECR ratings last year under the existing performance system. Moreover, 99 per cent secured A-grades. He said that the current peer review process does not appropriately evaluate officers’ integrity or the quality of their work.
At present, cash rewards are distributed at the discretion of seniors, often based on personal likes and dislikes. The chairman claimed the new system would bring a significant improvement in transparency, noting that determining performance has long been a challenge.
Concerns over loopholes
On March 25, the FBR ran the digitised system for the first time to calculate the ranking of over 1,500 tax officers. Officers were asked to digitally rate 45 colleagues within a 12-hour period.
The selection of 45 peers for each officer was based on various factors, including city of posting, same department or batch affiliation. The system automatically generates the list and sends it to each officer’s personal email.
The ranking determines financial rewards, with Category-A officers receiving four additional salaries, followed by Category B with three, Category C with two, and Category D with one. Officers placed in Category E, however, are excluded from any cash rewards.
Concerns have been raised by officers about technical flaws in the PMS and the lack of legal
safeguards to determine integrity. The FBR chairman clarified that PMS is not currently tied to promotions, but he did not rule out the possibility of using the data for future promotion criteria and reward allocations.
One major concern raised was the delay in announcing categorisation findings. Although the system was run on March 27, results were not released until April 18 — a 21-day delay that fuelled speculation about possible tampering. Besides, the reward rules were amended just days before the results — on April 16 and 17.
A senior tax officer involved with PMS attributed the delay to procedural requirements, stating that the amendments required vetting by the Law Division and had nothing to do with the results.
To address suspicions of manipulation, tax experts have suggested that the FBR grant read-only access to officers or email the results directly. Since the digital system can generate results instantly after peer evaluations, such delays were seen as avoidable.
Mr Langrial confirmed that a three-member anomaly committee has access to the system and may elevate or downgrade a limited number of officers. However, this human intervention has raised concerns that personal preferences could again influence decisions, undermining the spirit of the digital system.
Limitations
Moreover, interviews with officers revealed serious flaws in the newly introduced system. It enforces a mandatory quota, limiting each category to eight officers. “I wanted to place 12 officers in Category A, but the system forced me to shift four to B,” one officer said, highlighting the system’s lack of flexibility.
This ‘arbitrary’ ranking process has raised fairness concerns, as officers reportedly rated familiar colleagues higher while unintentionally downgrading others — especially those from different cities with whom they had no interaction.
“I marked those I knew as top performers, while others from different cities, who might deserve an A, ended up in D or E,” another officer admitted, underscoring the unintended consequences of the forced-distribution model.
“I now realise that by rating individuals without any direct knowledge of their professional conduct or work quality, I have inadvertently contributed to unfair discrimination against several officers, under a forced categorisation scheme, which was never my intention,” a tax officer wrote in a letter to the chairman.
Tax experts have proposed increasing the upper cap for the top three categories from 20pc to 30pc or even 33pc. They argue for removing the mandatory distribution formula and granting evaluators the discretion to place deserving officers in appropriate categories, instead of rigidly filling quotas.
However, officers involved in designing PMS defended the system’s forced distribution, arguing that open-ended categories would replicate the earlier manual pattern where nearly everyone received A or B ratings.
Currently, integrity accounts for 60pc of an officer’s score, with performance contributing 40pc. But without a clear definition or quantifiable matrix for ‘integrity’, evaluations are vulnerable to perception and hearsay. Tax experts argue this could stigmatise officers as ‘honest’ or ‘corrupt’ without a factual basis.
“I was placed in Category B, which automatically made me appear less honest than those ranked in A, despite the evaluation being based on perception rather than any measurable indicators,” a junior officer wrote in a letter to the chairman.
Unpredictability
Officers assigned to one category in one review may find themselves in a completely different tier six months later, reflecting the system’s unpredictable nature. Some liken it to a stock market index, subject to fluctuations with each cycle.
Without a more stable framework, officers warn that over 50pc of the workforce could end up being unfairly labelled as dishonest or poor performers within the next two review cycles.
Tax experts suggest that integrity should be clearly defined and its weightage reduced to enhance the system’s fairness. A more balanced system could assign 20pc of the evaluation to four immediate reporting officers, with another 5pc for integrity assessments submitted through the system. Reporting officers, they said, are best placed to evaluate the conduct of those who worked under them.
Besides, they propose incorporating training results into the PMS to ensure that officers’ skill development is also reflected in rankings. The algorithm, they argue, should also factor in the nature of officers’ postings and financial integrity. Some officers repeatedly secure key positions due to strong connections, while others are sidelined into marginal roles.
Reputation of officers
Tax officers have long voiced concerns about being targeted based on intelligence reports. They see the PMS as a more structured and transparent way to evaluate integrity and performance. The government must legalise it so future assessments are based on this approach rather than intelligence reports to make it a viable alternative.
With a single click, 300 officers were placed in Category E — labelled as having low integrity or poor performance. Those in D, C and B were similarly categorised without clear justification.
The government must also clarify that tax officers are not being unfairly singled out. Officers argue that unless PMS is legally protected and uniformly applied across services, it could deepen mistrust within the FBR.
While financial incentives are important, subjecting officers to vague and fluctuating evaluation criteria may demoralise the workforce. If unresolved, these concerns could significantly hinder revenue collection and undermine efforts to bridge the staggering Rs7 trillion tax gap in the system.
Published in Dawn, May 5th, 2025
