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Budget 2020: Paradigm shift needed

Dr. Ikramul Haq

Budget 2020 is in the making amidst very difficult times when we are faced with economic meltdown due to Covid-19 outbreak and extreme hardships by weaker segments of society. The traditional approach adopted for decades in Pakistan for balancing the books, levying more taxes, containing fiscal deficit and other number games will have to be given up in totality under the prevalent exceptional circumstances.

The central point of budget 2020 should be achieving the long-delayed and much-needed goal of welfare of the common people and providing universal entitlements to all through a comprehensive social security system. We, as a nation, must rise up now to deplore the very idea of having people to remain mired in poverty. For this, in the budget 2020 the main focus should be on initiating a number of welfare programmes to boost up those lagging behind, enabling them to move up economically and socially. Presently, we want to keep them where they are and merely give them subsistence allowance or charities etc. The policies should aim at empowering the downtrodden and the have-notes.

At this juncture of history, Pakistan needs class stability to avoid chaos, civic strife and lawlessness. The redistributive fiscal policies alone cannot ensure welfare through social mobility. If these could, Nordic countries would not do as well as they do (their welfare states are not appreciably more generous than Britain’s). The most important factor apparently is their superior education system. Education has long been recognised as the most important single trigger of social mobility—and all four Nordic countries do unusually well in the school-appraisal system developed by Organisation for Economic Cooperation and Development (OECD). Our economists can learn something from this as education in Pakistan is not only very expensive now but is also pathetically poor in quality.

The callousness of all governments is evident from the fact that nearly 25 million children are out of school in Pakistan in gross violation of Article 25A of the Constitution—see detailed judgement of Supreme Court [2014 SCMR 396 re Petition regarding miserable conditions of schools] and there is poor or non-availability of free and quality healthcare, universal pension, income support, decent living standard etc as a right to life, highlighted in great detail in a landmark judgement by Supreme Court of Pakistan in Shehla Zia v WAPDA [PLD 1994 693].

Our dilemmas are oppressive taxation, unproductive expenses, incompetent and inefficient monstrous government machinery and non-taxation of luxury facilities used by elites e.g. clubs and golf courses, unprecedented exemptions given to generals, judges and high-ranking civil officials—all these are huge burden on the national kitty. The poor are the victims of oppressive taxes, whereas the ruling elites are thriving on taxpayers’ money.

While budget allocations are inadequate for health, education and other services, elites get unprecedented perquisites and occupying expensive properties that can be used for public welfare. The annual budgets by the federal and provincial governments hardly focus on the welfare of public at large.  The way our governments—military and civilian alike—have been wasting and plundering taxpayers’ money is not a secret.

There is no plan with any political party ruling in the centre or a province for uplifting the rural areas to a respectable status in order to check rising migration to urban areas, which is fast becoming a nightmare with each passing day. Budget-making is a routine bureaucratic exercise for all the governments. They have no vision to make the country a self-reliant economy and welfare state. They are not ready to cut wasteful, unproductive expenses, reduce the size of cabinets and government machinery, make government-owned corporations profitable or privatise the same, accelerate industrialisation and increase productivity and improve agricultural sector.

Reducing economic inequalities through a policy of redistribution of income/wealth is not the agenda of any political party—their manifestos are based on rhetoric rather than any concrete plans to achieve this goal. Every night anchors on popular talk shows debate frivolous issues but never raise their voices against oppressive and anti-people tax policies and unprecedented luxuries enjoyed by the militro-judicial civil complex and politicians in power. They never pose questions to leaders seeking their vision and strategy to make Pakistan an egalitarian state.

Empowerment of people through local governments should be our top priority as envisaged under Article 140A of the Constitution. Political, administrative and fiscal decentralisation is the key to democratisation of institutions. This is the most neglected area in Pakistan. Article 140A requires that decision-making power should be with the elected local governments. A council, elected by the residents, must enjoy the right to levy municipal taxes. Municipalities should be given wide-ranging powers. Extensive functions that fall within the specific sphere of authority must include education, health care and social welfare services. The municipalities should also be responsible for matters related to the residents’ free-time, recreation, housing, and the management and maintenance of their living environment (i.e. roads, streets, water supply and sewerage), as well as land-use planning and functional municipal structures.

In all successful democratic models, taxes at grass root level play a critical role in municipal self-governance. The power to levy and collect taxes is one of the cornerstones of municipal self-governance as it ensures that the municipalities can manage the functions that they have undertaken to execute or those for which they are responsible for, under the law. In social democratic countries e.g. Sweden, Norway, Denmark and Finland, the most important feature of fiscal management and delivery of social services is municipal tax.

If we want to make Pakistan an egalitarian society, the policy-makers in the forthcoming budget should not be oblivious to redistributive fiscal policies and social welfare programmes for social security and upward mobility of the less-privileged, have-nots and the downtrodden. The poor should not be insulted by giving any so-called “economic relief package” by way of mercy. Such reliefs (sic) of cosmetic nature cannot be a solution to multiple problems faced by them, for example, lack of equal opportunities, free quality education/healthcare, income support, universal pension, easy finance facility to be self-reliant, decent housing and affordable modern transport facilities.  

We need short-term and long-term polices that can help the poor to move upwards. Priority-wise, education is still at the lowest level in our state policies. Public education system is worthless, not imparting world-standard knowledge/skills/ and/or vocational training. Then free hand is given to numerous private business bonanzas—costly or otherwise are nothing but paper degree factories! The federal and provincial governments must realise that it is not only spending more money on education that matters but how to use the entire system as an effective tool for social mobility and to improve the quality of human fabric and skilled human resource. There is a complete lack of understanding of this perception on the part of our rulers and the result is that poor segments of society are condemned to remain mucked up in abject poverty and their children have no chance to move up as education is either not available to them or is of no practical use.

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The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS).

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