Pakistan does not have a revenue problem. Pakistan has a spending problem. Over the past four years, the government collected Rs34 trillion as ‘Tax Revenue (FBR)’. Over the past four years, the government collected Rs3 trillion as ‘Petroleum Levy’. Over the past four years, the government collected Rs34 billion as ‘Gas Infrastructure Development Cess (GIDC)’. Over the past four years, the government collected Rs560 billion as ‘Royalties and Fees’. Over the past four years, the government collected a total of Rs14 trillion as ‘Non-Tax Revenue’.
Over the past four years, the government borrowed Rs9 trillion as ‘Non Bank Borrowing (NSSs & Others)’. Over the past four years, the government borrowed Rs4 trillion from lenders outside of Pakistan. Over the past four years, the government borrowed Rs13 trillion from banks–T-Bills, PIBs, Sukuk.
Cold truth: over the past four years, the government took in Rs78 trillion. This is more money than the government consumed in the past 50 years.
Obviously, Pakistan’s crisis is not a shortage of money. Pakistan’s crisis is the economics of how the government spends money.
Over the past four years, government records show ‘Development’ of Rs6 trillion – Rs150,000 per Pakistani family. Recorded as “Development.” But development must be visible. Development must be measurable. Development must change lives. If families cannot see development, then the question is simple: where did the money go?
Over the same four years, Islamabad spent a total of Rs105 trillion – Rs2.6 million per Pakistani family; Rs55,000 per family per month. Where did the money go? Where are the schools? Where are the hospitals? Where are the water systems? Where are the exports?
Look closer: Government expenditures are rising much much faster than revenue. No tax system can save the government.
The debate is not “high tax vs low tax.” The debate is: Can the government stop losing faster than citizens can pay? So where did the Rs105 trillion go? The answer is buried in the expenditure side of the ledger. Over the past four years, debt servicing alone consumed roughly Rs34 trillion. One-third of all government spending went to paying interest on yesterday’s borrowing. Not schools. Not hospitals. Not water systems. Interest.
Pensions consumed more than Rs4 trillion. Running the civil governments at the federal and provincial levels required around Rs5 trillion. Subsidies cost taxpayers another Rs4 trillion. Grants, transfers and support programmes took trillions more.
Then come the so-called ‘state-owned enterprises’ (SOEs). Pakistan International Airlines, Pakistan Steel Mills, Pakistan Railways, electricity distribution companies and a hundred other entities consumed Rs6.6 trillion.
This explains why taxes keep rising. It explains why governments keep borrowing despite record revenues. It explains why every budget begins with promises and ends with another financing gap.
Red alert: Pakistan’s problem is not that citizens pay too little. Pakistan’s problem is that the state consumes too much.
The real budget question is not how much more the government can collect. The real budget question is how much less the government can waste.
Remember: No country can tax its way out of uncontrolled expenditure. Before demanding new taxes, the government must explain: Where did the old trillions go?
Lesson from history: No tax system can fill a state that leaks faster than it collects.
—The writer is a journalist and
political analyst.
