The basic issue which confronts national economy is the ever- widening gap between revenues and expenditure and pilferages within the existing system. Notwithstanding the numerous ills that adversely impact our economy, the major hurdles are IPP Capacity payments, failure to increase revenues through uniform taxation, political instability and adopting austerity measures starting from the top, including withdrawal of luxurious perks and benefits to the paid bureaucracy. Till such time that we have a balanced budget, high profile mega projects should be put on hold (motorways etc.) and funds diverted to investment on education in science, technology and economics, provision of health, justice, security and clean drinking water to all citizens.
It is said that “It is not the business of the State, to do Business”; By inference it means that departments of state, funded by taxpayers, must also not do any business, because of conflicts of interest. Pakistan was created through a political process, but this process was derailed from 1953 onwards. Civilian supremacy became a casualty. This has adversely impacted development of a competitive corporate structure, and replaced it with cartels and monopolies that are involved in massive tax evasion, successive amnesty schemes etc., casting a gloom of uncertainty. Our exports have declined. We rely on importing luxury consumer items, that should have been manufactured locally. National security hinges on economy and revenues generated. All over the world, people eligible to pay taxes, do so, because of fear of tax evasion, which is considered a serious crime with severe punishments, fines etc., including confiscation of assets. It is the fear of law, which alone ensures that rule of law prevails and not motivational advertisement campaigns. There should be a uniform threshold of annual income, above which tax should be levied on salaried and non-salaried traders etc. The present tax-exemption annual limit of 6Lakhs should be raised to above 8Lakhs, given the inflation. What Pakistan needs, is to bring those who have never been registered, within tax-net, instead of continuing to burden already registered tax payers and filers.
The record exists, for every urban/rural property. All those who own more than one house, expensive cars, registered in their name or someone else, with foreign travel record, exceeding two annual visits per annum, for two consecutive years should pay taxes. All that is needed is for FBR is to coordinate. This can only be done, if the political will is there and realization that status quo can no longer prevail. Political parties, bureaucracy and the ruling elite must cease protecting special interest groups from tax evasion. Failure will jeopardize lives of over 240Million citizens of this country, for whom Pakistan is their motherland. All “Benami” transactions must be probed by FBR and law enforcement and Benami individual should be questioned for money trail etc., with imposition of outstanding taxes etc. He/she will spill the beans and the state can recover taxes due, with backdated liabilities and penalties etc.
For decades, the powerful retail/wholesale cartels, smugglers, big landlords, tobacco, sugar, cement, fertilizer and real estate cartels, where bulk of black money is parked, have thrived and robbed national exchequer of billions in tax evasion. Unfortunately, other than pep talk to satisfy International Financial Donors, political will is lacking. Such extensive tax evasion could only occur with cooperation of corrupt tax officers and their godfathers. It is common knowledge that most of the affluent wholesale and retail traders have support from political parties and powerful establishment. For decades, few powerful “Arthees” and wholesale dealers, have formed cartels, involved in commodities, livestock, and energy sector etc., resorted to hoarding, disrupted the supply chain, creating artificial shortages followed by black-marketing etc. Billions of dollars are involved in such irregular activities.
Given the visible Conflicts of Interest, no meaningful effort has been initiated to get out of this viscous Circular Debt, that is mounting astronomically. It defies logic that despite possibility of the state going bankrupt prevails, the beneficiaries of IPP Power Purchase Agreement continue to benefit. The standard industry practice for PPA is a duration of 10 to 15 years. However, the secrecy surrounding PPA signed with GoP, raises eyebrows and suspicions about these thermal based plants using furnace oil. By 2024 most of these PPA agreements should have matured. There was no reason why numerous hydro based energy generation units were not established along the rivers. There is a potential for Renewable Power Purchase Agreements, given our natural resources, including wind and solar, which has been neglected because of the clout of the cartels involved.
—The writer is contributing columnist, based in Lahore.
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