Introduction
Collection and administration of various taxes, such as income tax, federal tax, sales tax, customs duty, and excise duty, are the responsibility that lies with the FBR (Federal Board of Revenue) in Pakistan. This department aims to generate revenue within the country and operates under the Ministry of Finance. FBR has the power and responsibility to formulate various tax policies for the progress of the country and ensure its proper implementation and compliance by providing modern techniques to assist taxpayers, prevent non-filing, and bring transparency to the tax administration. For non-compliance and tax fraud, it can take actions and investigations. It can also regulate national and international trade by managing customs regulations and the like (Asad, 2024).
Digital Tax Administration and Track and Trace System of FBR
Though FBR has been using a digital system for a long time in the form of electronic payments, online tax filing, and data management to ensure fulfillment of tax obligations. Here we shall focus on the digitalized tax administration regarding the tracking and tracing of the movement of goods within and out of the country to ensure the payment of all due taxes correctly. Hence, the Track and Trace System (TTS) was introduced in 2021 for the monitoring and evaluation of production and sales of “sugar, tobacco, fertilizer, and cement in the first phase with a plan to extend it to further sectors.” The system uses modernized technologies such as barcodes and the “unique identification number (UIM)” system to track and monitor the production and sales in real time.
Reasons for the Failure of TTS
Recent reports released on the concerned issue of the failure of the Track and Trace System can be attributed to various reasons. First of all, the bureaucracy serving as the leader of this whole system turned out to be highly incompetent, as it failed to bring communication and collaboration between the relevant stakeholders. The inexperience of licensing companies and the relevant technology to cater to the local requirements according to the local environment was a major hurdle. Data management was totally mismanaged in terms of internal and external auditing, conferring fines, and proper arbitration of orders.
Technology transfer to all the relevant stakeholders and industries was totally overlooked. The implementation was delayed due to prolonged legal challenges. There was no division of such a large-scale project into phases, no concept of making the local industry owners of those excise goods aware of the digitalization and what could be the penalties for non-compliance, and no strict work with the system in collaboration and full support (BOL News, 2024).
Identified Managerial Issue: Ineffective Leadership
Studying various reports and going through talk shows, one can come to the point where “ineffective leadership” is serving as one of the highlighted managerial issues here. Though the system failed at all levels of its organization, the responsibility lies with the leadership. The inefficient and ineffective bureaucratic leadership failed to work strategically and provide a clear direction to all the relevant departments and stakeholders.
It lies within the leadership to analyze and work on each and every aspect and then direct the subordinates to work on their relevant fields of expertise. Studies have shown that officers of grades BS-18 to 19 were employed to handle the working of the system, but they were not ready to come out of their royal robes and work as “public servants,” resulting in poor and delayed implementation processes. They had no expertise in the enforcement of tax and tax-related matters, along with total unfamiliarity with the digital technologies related to innovative tax administration (Ali, 2024).
Tracking the production and trade of excise goods like sugar, fertilizers, and tobacco is not an easy task. A huge number of stakeholders, along with the political groups, are involved in the working of industries on such a large scale. They work within a complicated, interwoven network. They must be handled with utmost responsibility, especially when we are talking about taking all this complexity and digitalizing it. It will make it so that everything is entered into a central system, where every little aspect cannot go without checks and balances, as the situation is now in the hands of artificial intelligence and information technology.
Furthermore, this process requires capacity building, both in terms of technological innovations as well as human skill development. It requires a transformational attitude to be able to navigate any possible complexities that can occur in the organizational work at any time. It requires quick and robust adaptation and implementation of new policies to make a large-scale process like the Track and Trace System work.
Importance of Effective Leadership
Effective leadership is of utmost importance when it comes to any administrative project at a governmental level; the same goes for the tax administration. The concerned area especially requires able leadership, as the issue of tax collection for a developing country like Pakistan is already full of hurdles. The digital version of tax administration is liable to more complexities at all levels of the organizational structure. Only effective leadership, in my perspective, would be the reason for its successful implementation, as it provides a strategic vision and management to mitigate any type of risks involved. An effective leadership style maintains cohesiveness and collaboration between relevant stakeholders and departments, ensuring efficient digital tax administration and meeting evolving demands for it.
Literature Review
The first research paper emphasizes the effects of inadequate and ineffective leadership, affecting the organizational performance in developing countries like Jordan, focusing on Jordanian institutions, with impartial advice for leaders. History is full of stories related to the achievements and positive outcomes of effective leadership. But what really needs to be studied is the “ineffective leadership” from all angles, i.e., what are the causes, why does such leadership fail, what are the characteristics of ineffective leadership, how have they managed to create a negative environment detrimental to the processing of a certain project or a department. The consequences of inefficient and ineffective leadership have to be borne by the subordinate staff, and ultimately, the whole organization suffers from it (Aboyassin & Abood, 2013).
It can be characterized through this article that an ineffective leader is a narcissist with unethical practices, short-term goals, a scattered focus, and negative and useless strategies with no will to achieve the required goal. This article categorizes effective and ineffective leadership into various categories. The influential ones, in the form of innovative specialists, comprise 5 to 10 percent of all leaders. The qualified leaders, experts in their skill sets in the relevant field, make up 40 percent of the leaders. The third category is of normal leaders, maintaining balance in everything, making up 40 percent; and the fourth one is the category of ineffective leadership, comprising 5 to 10 percent of the leaders.
The ineffective leaders are can be further categorized into various models, such as self-inertia and having no improvement. Then come life leaders, totally resistant to change; unethical ones compromising on personal and organizational values; leaders of the past; administratively myopic leaders, reacting without thinking; lifeless, directionless leaders; dismal models creating hard negative times for the employees; leaders; micro-ones, focused on the accomplishment of the trivial tasks; and narcissist leaders, sitting in their self-love. “These models highlight how ineffective leadership hampers organizational success and undermines employee morale and development” (Aboyassin & Abood, 2013).
Ineffective leadership consists of various destructive dimensions, which include the absence of a shared strategic vision, negative employee relations, unethical behavior, and ineffective leadership qualities. These factors impair both individual and organizational performance in institutions in Jordan. Research findings critically analyze that unethical violations exert the strongest negative impact on performance individually, whereas the absence of collaborative strategic vision has the least effect. Addressing the aspects causing ineffective leadership is crucial for lessening these adverse impacts and fostering a healthy and productive organizational environment (Aboyassin & Abood, 2013).
Tax administration is something that has strong oversight boards, which means leadership in the form of effective governance structures. This study for the Asian Development Bank aims to motivate developing nations to mobilize their domestic revenues through digital roadmaps, the most accurate source for efficient, transparent, and effective digital tax administration. Risk management, data analysis, and monitoring of compliance and non-compliance are what digitalization does in the relationship between tax authorities and taxpayers.
But this road must be adopted while looking into the possible challenges and risks according to the local context and local environment of a country. The critical responsibilities lie with the tax authorities and the top management managing such programs to ensure future supporting requirements and continuous innovation strategies. Political risk also lies in the fact that the political arena might not support the scope, scale, and overall duration of the concerned project. Hence, political leadership has a major influence on effective digital administration, as the organizational components such as budget allocation, human resources, and relevant managerial hierarchies will eventually be supported through the political leadership.
A communication strategy must be adopted with the relevant stakeholders to get to know what they expect from the taxpayers through that project. In the case of a large-scale project, it is divided into various phases to monitor it properly, instead of just shoving it in the face of the relevant departments and the concerned taxpayers with no proper organizational approach. Such a process can only become possible through effective leadership at each phase and carrying out all communications with great supervision and a strategic approach towards change management (ADP, 2022).
With the increasing challenges of globalization and continuous economic interdependence among world states, it is the need of the hour to adopt the process of digitalization in the tax administration effectively, especially when globalization demands an honest approach towards tax records, without any tax collection gaps due to the informal sector. Tax administration stands at 65.6 percent on the transformation meter that is focused on ensuring “public institutions embed strong governance principles, build a long-term vision and establish trust serving their citizens” (Ahmadi Zeleti et al., 2021).
IT in the public sector needs a little more concentration because it is a necessity, but the public sector prioritizes low-cost processes to give value to the money collected through public funds. The structures in private organizations are successfully steered by the maturity level as per the board of directors of the IT committees. However, studies show that the public sector is filled with tiers of responsibilities, increasing the role of uncertainty in roles, appointments, and decision-making.
A European study shows the effectiveness of tax administration by the data collected, which is the source of high transparency and an effective tax administration system with quality service, resulting in chance non-compliance and total customer satisfaction. Decisions related to IT management, organization, quality measurement, and compliance management can only be made through leadership experts in these tasks, including the development of innovations and involving third-party sectors. These are the tasks essential for effective tax administration but can only be supervised through expert leadership. Leadership in terms of operational leadership, leadership for effective customer service, and information technology leadership ensures collaboration and efficient relationships between structures, capabilities, and processes.
IT projects in the public sector on such a large scale are a challenging task due to intricate system designs and project and contract management issues. Some of the common problems include underestimation of project complexity, limited user involvement, and ineffective management of stakeholders. These issues usually persist due to managerial as well as technical capability deficits. Misperception of project complexity leads to governance and integration issues. Improved knowledge dissemination and adapting to the changing processes to handle complexities are essential. A study on fourteen projects from the UK, Australia, and the US has emphasized the need for a great deal of coordination, capacity building, and collaboration when a large number of stakeholders are involved in a project (Patanakul, 2014).
Our fifth article investigates the determinants of efficiency in tax administration, including autonomy of the departments with emphasis on leadership style, training of the employees, employees’ motivation, and use of ICT. The study investigated the efficiency of tax administration and its determinants in Pakistan, focusing on the effects of autonomy, leadership style, and employee-related factors.
A sample consisting of 96 respondents from the Federal Board of Revenue (FBR), Islamabad, was questioned and surveyed through a questionnaire. Results showed employees’ training and motivation positively influenced tax administration efficiency. This study states that leadership is actually a process to influence and guide others to achieve goals. There can be various styles to steer the employees, such as autocratic, participative, or transformational ones that focus on the development of subordinates, an important step in effective tax administration. Internal conflicts might hinder a leader’s efficiency, impacting the organization and its performance (Nooruddin et al., 2020).
Common Ground in These Research Papers
It includes how all five of them, in one way or another, discuss the complexity of large-scale projects taken up at the government sector level, and they are full of complexities, either due to the nature of the project or the inefficiency at the organizational level. They have highlighted the importance of leadership in the management of governmental projects, as it is the most important determinant to ensure vision and strategy, adaptability, motivation, expertise, capacity building, and overall organizational planning, as the failures of these steps at the public sector level will eventually affect the economic and political strata. Also, these articles have highlighted how leadership is a complicated process in the public sector.
An effective and trained leadership can change the direction of a project by bringing it on track and making sure all the factors affecting that very project are going to make it successful. It also depends on how well the technology, such as digital tax administration, can be brought into the country’s tax institutions and molded according to the local needs and environments. The continuously changing global patterns require intelligence to be managed when such advancements are necessary to be institutionalized locally.
All these articles also emphasize the research that must be done to find out the causes of ineffective leadership and authoritative entities. The psychological aspect of a leader also has great importance in determining whether he or she is suitable for the job of being the director in reaching the goals, or is just interested in living in the historical culture of his or her organization.
Especially in the case where a digital system is about to be used in all aspects of the working of an institution on such a large scale and would become the ultimate source of transparent tax administration, effective record keeping, and data management of personal records. This is some delicate work to handle and is a necessity to deliver to the public, and it should be in the hands of an expert or a person with morals and ethics to serve his or her department with full honesty and a responsible attitude.
Theories Addressing the Ineffective Leadership
The institutional theory can explain why the tax administration faces this managerial issue, such as the conflicts between normative, regulative, and cognitive pillars that eventually affect the leadership styles and behaviors. Institutional constraints may also act as a hurdle for not adapting to the technological innovations and improvised leadership to work with them, plus the political pressures that influence leadership effectiveness to defy quality and honesty, leading to project failures (Denhardt, 2014).
Organizational culture theory can also explain how the culture of this organization influences leadership in its resistant attitude towards innovation, or leadership and bureaucratic inefficiencies. In such circumstances, leaders may become hesitant to bring technological innovations that bring more transparency, thereby surrendering to the political pressures (Denhardt, 2014).
The new public management (NPM) theory is a relevant solution to this issue. It addresses problems like inefficient leadership and inadequate training, which are often the result of leadership failure. The theory emphasizes decentralization, expertise, and leader training to improve monitoring and evaluation at all levels of the organization.
Content Unexplainable Under Theories Given
Though the above-mentioned theories adequately explain the issue and how it can be addressed through various theoretical approaches, they do so at a broad, systemic, and organizational level. However, they have failed to explain the personal interests, the psychological motivations behind not supervising effectively as a leader, internal power dynamics, foreign interventions in the national economy, and the absence of human and material resources as the possible reasons for ineffective leadership in the administrative structure of tax collection. Also, why are these higher authorities reluctant towards handwork and adopting technological know-how? It is the only possible way to make them efficient towards their duty, by understanding the complexity of such delicate projects and the nature of their job of “public service.”
To explain the unexplained factor by these theories, what I would research is the grassroots level of the causes and effects of leadership ineffectiveness in digital tax administration. Why do the individuals in leadership roles, be they the chairpersons, the bureaucrats, or other individuals, fail to fulfill their responsibilities? Are there any factors hindering the leaders from fulfilling their responsibilities adequately? Another factor to study is whether there is the availability of trained, qualified, digitally literate, and honest leadership to look after such delicate tasks, such as that of tax collection. Another factor that can be studied is the leadership styles that might be effective in a country like Pakistan, such as transformational, servant-style leadership, bureaucratic leadership, coercive type, or collaborative leadership style (Miranda, 2023).
References
- Aboyassin, N. A., & Abood, N. (2013). The effect of ineffective leadership on individual and organizational performance in Jordanian institutions. Competitiveness Review, 23(1), 68–84. https://doi.org/10.1108/10595421311296632
- Ahmadi Zeleti, F., S. Walsh, G., Ojo, A., & Mulligan, E. (2021). A Case of the Governance of Digital Technology in Tax Administration. 14th International Conference on Theory and Practice of Electronic Governance, 298–307. https://doi.org/10.1145/3494193.3494234
- Asad, S. H. (n.d.). PAKISTAN: REVENUE MOBILIZATION MEASURES & CURRENT TAX ISSUES.
- Asian Development Bank. (2022). Launching A Digital Tax Administration Transformation: What You Need to Know. Asian Development Bank. https://doi.org/10.22617/TCS210343
- Dana Miranda. (2023, April 27). 10 Management Styles Of Effective Leaders. Forbes Advisor. https://www.forbes.com/advisor/business/management-styles/
- Kalbe Ali. (2024, April 30). A government body is set to pinpoint culprits behind Track and Trace delays. DAWN. https://www.dawn.com/news/1830541
- Nooruddin, Basharat Ali, Amanat Ali, and Shahid Iqbal. (2020). Investigating the Determinants Influencing the Tax Administration Efficiency in Pakistan. International Journal of Scientific and Engineering Research, 11(1), 404–414.
- Patanakul, P. (2014). Managing large-scale IS/IT projects in the public sector: Problems and causes leading to poor performance. The Journal of High Technology Management Research, 25(1), 21–35. https://doi.org/10.1016/j.hitech.2013.12.004
- PM Shehbaz orders inquiry into failure of FBR track and trace system. (2024, May). BOL News. https://www.bolnews.com/pakistan/2024/05/pm-shehbaz-orders-inquiry-into-failure-of-fbr-track-and-trace-system/
- Robert B. Denhardt. (2014). Theories of Public Organization (7th ed.). Cengage Learning.
- Track and Trace System. (n.d.). Federal Board of Revenue. https://www.fbr.gov.pk/introduction-track-and-trace/152962/152963
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