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Hopes amid historic disappointments
Huzaima Bukhari
“Hope is the only bee that makes honey without flowers”—Robert Green Ingersoll
Each year, just before announcement of budget for the forthcoming financial year, the Federal Board of Revenue (FBR) receives many proposals by accounting professionals, the business community, industrialists, bankers and even from government officials working in the revenue departments of the country. It has been observed that in these crucial moments, Parliament members usually have nothing much to offer as there hardly is any debate related to the proposed finance bill other than create commotion by the opposition during its presentation. Pakistan’s misfortune is that those who claim to be people’s representatives lack the requisite ability to understand economic matters that are the backbone of any country. Adding to this misery, they even do not want to educate themselves by listening to sane voices because these voices are deafened by the ruling elite who find themselves losing their might in the event of simplification of procedures and facilitating the public in improving its financial worth. Result? All proposals meticulously prepared after long sessions of brainstorming are just dumped in waste bins. The same exercise is repeated year after year in expectation of different results.
One of the main components of every budget is taxation the problem with which is that people are hesitant to pay taxes on their real incomes while the government, stripped of real cash is forced to resort to all kinds of measures that aggravate public misery making it more antagonistic towards the revenue authorities. This kind of an attitude leads nowhere besides pushing the country towards bankruptcy, whereas the cream of the nation continues to amass unaccountable wealth and incomes. Since the introduction of the Income Tax Ordinance, 2001 repealing the time-tested Ordinance of 1979, coupled with massive changes in administration and procedure from devolution to centralization, matters have gotten even worse.
The Constitutional Eighteenth (Amendment) Act, 2010 with its bizarre distribution of taxation while giving more autonomy to the provinces has left them hooked onto the Centre for catering to their needs rather than making them self-sufficient. The Centre has become over-burdened with the passage of time for lack of resources to limit fiscal and trade deficits, meet the ever-mounting international and domestic debts and managing a sizeable population that is growing at an alarming rate. At this juncture, unfortunately the country is struggling in the Intensive Care Unit of the International Monetary Fund (IMF) that should be enough to raise red flags. In such crucial moments, the nation must rise, especially those of its members who are blessed with ample resources including the bureaucracy, to help Pakistan’s derailed economy back on track no matter whosoever is in power. This is no time to settle political scores that can wait for the future. In any case, the country should come first for without it, we are doomed.
The last thirty years has witnessed a most erratic economic graph dotted with average surges but more low dips. Pakistan is affected with economic infarction, because of inadequate revenue supply to the treasury due to unfair, uncertain, inconvenient and inefficient tax system (Adam Smith’s contra-principles). Huge tax gaps, corruption and misuse of available funds for oiling monstrous federal and provincial administrative machineries are further adding to the problems.
The business community of Pakistan has been highly active in their demand for restructuring the taxation system bringing it in line with set principles and this year too, a number of publications contain this recurring desire. At present collection of revenue has been delegated to the withholding tax agents whose other duties also include depositing the tax and supplying FBR with regular statements. More than fifty provisions in the Income Tax Ordinance still exist whereby people are made to either pay or collect income tax long before the date for filing returns, and even sales tax in some cases diverting their minds from their trade or profession to grapple with the authorities on withholding tax related issues. The idea to widen the scope of tax net through these steps has failed to increase number of return filers because FBR has no clue about data mining to catch hold of defaulters and potential taxpayers. One hopes that sanity prevails in the upcoming budget and this long drawn wish to see a more efficient revenue authority that can deliver without having to enlist non-governmental slaves is eventually fulfilled.
Right now, we should tighten our belts at all levels to make our economy grow by focusing on value-added agricultural, information technology and other industrial exports. There is dire need of new jobs that can only be possible by improving the manufacturing and related services sectors. It is also necessary that alternate energy solutions are made available to enable start-ups, small and medium sized enterprises and other entrepreneurs for establishing their trade. The present high cost of production has forced people to rely on imported goods that are much cheaper and superior in quality compared to the locally produced ones. This is definitely contributing to rapid decline in the manufacturing sector that requires immediate attention of the concerned authorities. How amazing that a country boasting of nukes has yet not established nuclear energy plants that can substantially overcome this crisis putting an end to load-shedding and improving the general lifestyle of the public.
A free market is a prerequisite to enhance economic activity. Rather than the government fixing commodity prices and flow of goods, let the supply and demand determine them. Stifling economy through unnecessary regulations, restricting trade, disallowing competition and imposing procedural rigmaroles can never allow smooth sailing of economy nor achieve desired results in terms of growth and sustainability. Despite the apprehension of difficult decisions, hopes run high that we should be able to overpower problems staring in our faces and turn the wheels of time towards progress and prosperity of our country and its people.
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The writer, lawyer and author, is an Adjunct Faculty at Lahore University of Management Sciences (LUMS), member Advisory Board and Senior Visiting Fellow of Pakistan Institute of Development Economics (PIDE)