(042) 35300721
Mon - Fri 09:00-17:00
Free consultant

Budget of, by, for elites

Dr. Ikramul Haq

It is not surprising that every budget of Pakistan, the latest one announced for fiscal year 2019-20 on June 11, 2019, has one common feature: burdening the common people, appeasing the mighty, extending benefits to the rich and toeing the line of the lenders/donors. Many experts emphasise that since beggars cannot be choosers, we have no option but to obey the commands of the International Monetary Fund (IMF) that has promised yet another US$ 6 billion bailout package for Pakistan on fulfillment of a host of conditions that are anti-growth and anti-people. The Pakistan Tahreek-i-Insaf (PTI), contrary to its claim of making Pakistan a self-reliant country, is now completely depending on an economic team recommended by the IMF—the lender of last resort.

Dr. Abdul Hafeez Shaikh, Advisor to Prime Minister Imran Khan on Finance, Revenue and Economic Affairs, heading the economic team of the coalition government of PTI, in post-budget Press conference on June 12, 2019, openly admitted that the heaviest taxes in the history of Pakistan were imposed “to qualify for new programme of IMF”. He went on to say that “I am ready to offend people for the sake of collecting Rs. 5550 billon taxes”. This confirms where his loyalty lies—acting as recovery man for IMF having no concern whatsoever of the disastrous impact of oppressive taxes and possible protests by those affected by harsh measures. While many unjust indirect taxes are going to make life of the less-privileged and downtrodden further miserable, generous money whitening scheme is open for the rich and mighty tax evaders and plunderers of national wealth, and extraordinary tax benefits available to powerful segments remain intact under the Second Schedule to the Income Tax Ordinance, 2001.      

The trio of voracious politicians, incompetent tax bureaucrats and donor-imposed technocrats keep on singing the mantra of “more taxes” without admitting that Pakistanis are one the most heavily-taxed nations in Asia where even about 90 million individuals not earning taxable incomes pay advance income tax of 12.5% as mobile users. The lenders/donors in their condition/studies do not stress the governments to reduce wasteful expenditure and spend adequately on health, education, infrastructure and human resource development for sustainable growth. We, however, should not criticise them as it is we who go to them and they of course want their funds back—the real culprits are our rulers who over the period of time have pushed the country into a deadly debt prison.  

For decades, under the tight noose of lenders, our elites have been enjoying unprecedented luxuries on loans and taxpayers’ money. The lenders never ask the governments to live within their means and end tax-free parks and perquisites of the mighty. They never question how the super-rich successfully manage to escape taxation on their colossal incomes by remaining out of tax net. However, the main fault is that of our incompetent governments that refuse to dismantle elitist structures and bring structural changes in this most oppressive tax system to make it growth-oriented so that our dependence ends on external and internal loans.

It is an admitted fact that the rich are not paying income tax according to their real incomes—total number of individuals paying tax exceeding ten million rupees is less than five thousand. Over 75% taxes collected are indirect, many even under the garb of income tax pushing millions below the poverty line every year. The Finance Bill 2019 presented along with budget on June 11, 2019 contains nothing to correct this distortion—it has on the contrary raised prices of many items of daily use like sugar and ghee, consumed by the poor, and imposed many additional and cumbersome liabilities on withholding tax agents.

It is an undisputed fact that the present and earlier governments have perpetually demonstrated, that they have no desire or concern for making Pakistan an egalitarian State through fair and just taxation. The prerequisite of such taxation is improving contribution of direct taxes as a tool of redistribution of wealth.

Overwhelming reliance on indirect taxes and withholding taxes raises serious questions about the fairness of Pakistan’s tax system—besides eroding tax base and creating fiscal imbalances, it has been continuously pushing the masses below poverty line and making the rich, richer. These rich earn enormous income, possess immense wealth, own industries, expensive commercial and residential urban properties, agricultural lands and on the basis of this money power they get elected no matter which party they join. Since they dominate national and provincial assemblies, they never legislate for progressive taxes, rather keep on getting exemptions for their perks and perquisites which they get free from the State! The same is the position of militro-judicial-civil-complex. In this way, the very purpose of redistribution of wealth as main object of a rational tax policy is being defeated and nullified in Islamic Republic of Pakistan—it is also evident from the very first budget of PTI that the nation was hoping to be pro-people!

Since Pakistan is controlled by predatory elites, there is no political will to alleviate poverty by taxing the privileged classes. Elites, even in their own interest, have failed to raise the required resources to run the affairs of State caught in a deadly dead trap. Adding insult to injury, money extorted in the name of taxes, mainly under exorbitant sales tax and withholding taxes, is also wasted by elites maintaining palatial residences, rest houses, messes and golf courses, just to mention a few. These free luxuries met from taxpayers’ money and/or loans, and getting State land on throwaway prices by elites are unique features of our elitist economy—so they keep on levying more oppressive and unjust taxes on the masses rather than ending these VVIP facilities, free perks and benefits.

Majority of the writers, experts and TV anchors do no highlight these facts and plead that “more taxes” are needed! Nobody raises the question “taxes for what?” Why 60% are living below the poverty line is not their concern. The collossal wastage of resources, coupled with non-taxation of the rich and mighty, has created a variety of crises for Pakistan, abject poverty for majority of population, unemployment, slow economic growth, debt trap, poor infrastructure, monstrous fiscal and trade deficits, shortage of foreign reserves and huge current account deficit.

In Pakistan: Economy of an Elitist State, Dr. Ishrat Husain, presently Advisor to Prime Minister for Institutional Reforms & Austerity, has aptly observed and concluded that in sharp contrast to the East Asian model of ‘shared growth’, based on rapid economic development coupled with a rapid reduction in poverty and more equitable distribution of “the benefits of development in Pakistan, the elitist model confers political and economic powers to a small coterie of elite (parasites)”.

The real challenge of non-taxation of super-rich who owe billions to the national exchequer is conspicuous by its absence in the Finance Bill 2019—for them is Asset Declaration Ordinance 2019 to whiten their collossal untaxed assets at home and abroad. In a nutshell, this is the budget of the elite, by the elite and for the elite.


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

Related Posts

Leave a Reply