Much has been written in this paper about the failure of so-called, tax reforms, which were initiated by the previous regime in 2002, at the behest of World Bank without even comprehending the dire consequences it carried for direct taxation. Before the reforms were introduced, the direct taxation, which consisted of income tax and wealth-tax was working on 'circle based (CB) system. Through the CB system was not the perfect option because of prevalent corruption, yet there was no other better alternative available. In order to improve the taxation system the simple way is to computerize the data, which is saved into a general data base system. However, the oligarchy in power instead of bringing positive changes in the system introduced the 'Functional System, admittedly a failed experience worldwide. In the old CB system every district was having a tax office with complete staff and infrastructure responsible for managing taxes of the whole area. The officer in charge of the circle was not only custodian of the taxpayers records but was also responsible for enforcing tax laws compliance i.e. timely filing of tax returns and thereafter creation of tax demand and ultimate recovery and budget of the area he was to administer. After the elimination of CB system, hundreds of circles established in the districts all over the country, were done away with. As a result, no authority capable enough was left to implement the tax laws in the vast areas of country. As a consequence, filing of returns in the areas where independent circles used to function has been discontinued drastic-ally. At present only those taxpayers are filing their returns whose transactions are subjected to sales tax. Thus they do not pay any tax but file the returns only to get adjustments of the deduction, causing massive loss to the federal revenue. Thus the functional system has caused immeasurable damage to the taxation system specially the direct taxes contributed by those areas which were managed by district tax officers for decades. The biggest damage caused by the functional system is that it has promoted a culture of non-compliance. I therefore suggest that the tax offices with an authority solely responsible for all activities of enforcing income tax laws should be restored at district level forthwith so that the non-compliance culture created by distorted 'functional system could be controlled. RAFIQUE AHMED, Karachi, November 2.