A state cannot function and provide basic constitutional rights and privileges guaranteed to all citizens, nor protect its sovereignty, unless and until it collects uniform taxes from all citizens, earning above a certain threshold. Exempting individuals, groups, foundations and cartels involved in commercial business or trade violates the constitution, which requires equality before law of all, without any exceptions. It is violative of basic tenets of Islam, which stress upon equality of all human beings living in a country with a Muslim majority. On February 5, 1945 Quaid in a message to Editor of “Muslim Views” stated that “Islam came in the world to establish democracy, peace and justice; to safeguard the rights of the oppressed. It brought to humanity the message of equality of the rich and the poor, of the high and low. The Holy Prophet PBUH fought for these ideals for the major part of his life”. It is the “glorious traditions of Islam”, to fight for the achievement of “man’s legitimate right, and the establishment of democracy”.
I fail to understand the rationale of protests by political parties, including religious parties, which demand that retail traders, real estate developers, big landlords, cartels etc be exempted from taxes. These political leaders must realize, that it is this mindset, which has prevailed since 1958 onwards, that Pakistan is on the brink of becoming a dysfunctional state, relying on foreign loans and debts. For a state whose total revenues from direct taxes, exports etc is not enough to pay salaries of its paid employees and their fabulous pensions and perks etc., it is suicidal to demand tax exemptions to continues endlessly. There is hardly any country which would offers repeated tax amnesty schemes for smuggled cars, including many which are stolen. This trend of offering tax amnesty schemes started in 1958, followed by others in 1969, 1976, 1977, 2000, 2008, 2013, 2016, 2018, 2019, 2021 etc. Amnesty schemes are offered as short-term opportunity for taxpayers and non-taxpayers to pay a certain amount, in exchange for relief on tax liability for the period preceding the offer, without any criminal prosecution. The objective is to increase revenues collected through direct taxation. However repetitive amnesty schemes offered by successive civil and non-civil governments has inculcated a culture of tax evasion. It is the fear of laws and strict penalties for tax evasion, which ensures that all citizens must pay their due share.
The deficit in the budget created by failure to collect revenues through direct taxation, results in resorting to indirect taxation, which burdens poor and middle classes more. It is this Elitist Capture, which has created acute budget deficits and an economic quagmire, with no fiscal space to offer the constitutionally mandatory subsidized education, health, basic needs like clean drinking water to the most deprived sections of society. When tax revenues are utilized for benefit of paid elite and building gated housing societies for the affluent, then it creates deep division and frustration amongst the majority living below the poverty line, or the middle classes. Feelings of deprivation lead to anger and chaos on the streets. It must be addressed on a priority basis. It is time to tax the rich and offer subsidies only to the poor. Pakistan’s national security is at stake from within the country, by this gross injustice.
The political leadership involved in protests should be protecting collective interests of citizens, instead of vested interests, involved in tax evasion. It would have made sense if these politicians were to demand an authentic forensic audit of PPA agreements with all IPPs across the board, to ascertain whether these units have the capacity to generate the electricity, for which they are paid guaranteed capacity charges. Why should they be protesting to protect Retail/Wholesale traders, big landlords, real estate investors and Land Mafia Dons, or the big cartels involved in smuggling, hoarding and black-marketing, creating artificial shortages, which disturb the essential supply chain. Institutionalized tax evasion, that has been going on in Pakistan for decades, is a conspiracy against the state. The State is forced to take foreign loans and debts from other countries and international financial institutions to bridge the deficit between revenues and essential expenditure. Such states are forced to follow their dictates and cannot protect their sovereignty and integrity. This precarious situation will continue till such time, every individual, group or foundation involved in commercial profitable ventures pay their due share of taxes.
There are many Muslim majority countries, such as Malaysia, Turkey, Indonesia etc. where all citizens pay taxes. In fact, in some of these countries, almost all transactions are cashless. The economy is digitalized and there is no concept or space for tax evasion. Almost 90% of petrol pumps in urban centers of Kuala Lumpur and other major cities are cashless. As compared to this even in major urban cities like Karachi, Lahore, Islamabad etc., digitalized financial transactions are discouraged, and in many cases even refused. At Kuala Lumpur’s major international airport KLIA, electronic vending machines within departure/arrival area offering snacks, coffee etc can be purchased with plastic money only.
A state becomes dysfunctional if revenues collected by national exchequer are not enough to meet all expenditures, such as welfare, law and order and securing of its borders etc. This equilibrium must be kept. Recent protests led by a religious party and other opposition parties which simultaneously demand relief from inflation and rise in basic food items and utilities like electricity etc while demanding that retail traders, real estate etc., are not brought into tax-net, is an ugly contradiction and a hypocrisy. Pakistan was created through a political struggle led by the Quaid, who believed that the Muslim majority would incorporate Islamic junctions of tolerance and equality before law for all citizens in the Constitution. It is the disruption of the political process through intrigues of individuals captive to their conflicts of interest that Jinnah’s vision was derailed in 1958 when the very foundations of the state were jolted.
—The writer is contributing columnist, based in Lahore.
