Rule of predatory elite

Dr. Ikramul Haq

The predatory elite of Pakistan—militro-judicial-civil complex, businessmen-turned-politicians and absentee land owners—are responsible for the prevailing mess. While the country is trapped in a deadly debt quagmire, every government—military and civilian alike—begs for bail-outs and then ironically talks about self-reliance! We keep on hearing about reforming the tax system but the elite shamelessly use the Federal Board of Revenue (FBR) as a tool to get unprecedented tax breaks. FBR has been made totally ineffective in taxing enormous assets owned and/or enjoyed by the elite. Adding insult to injury, the members of predatory elite enjoy life of luxury at taxpayers’ expense—free utilities, perks, perquisites, plots, clubs, golf courses, medical treatments abroad etc.

As a result of public funding and non-taxation of commercial activities/properties of elite, e.g. clubs and golf courses as well as unprecedented exemptions given to generals, judges and high-ranking civil officials, the national kitty suffers huge losses. If only these losses are recouped, our tax-to-GDP ratio can rise substantially. Thus, the narrative that Pakistanis do not pay taxes, popular with analysts, TV anchors, academicians, policymakers and foreign donors, is deceptive. The reality is that the middle class and the poor are victims of oppressive taxes (paying as high as 17% sales tax on items of daily use such as sugar, salt, petrol etc) and the predatory elites are thriving on state funds. Nobody is inclined to expose the obnoxious role of the predatory elite in destroying the economy and state institutions. The media owners and anchors, being beneficiaries of the exploitative system, cunningly divert attention of the masses towards trivial issues through hollow talk shows.

The predatory elite have only one agenda: self-aggrandisement. The concentration of power and wealth in their hands, coupled with lust for control, has given rise to perpetual institutional confrontations, social unrest and economic disparities. The unholy alliance between politicians, state functionaries and unscrupulous businessmen is the root cause of our many ills—including politically-motivated loan write-offs and flight of capital from the country leaving the masses in miserable conditions. Billions have been lost annually due to this unholy alliance. Since the rich and mighty do not pay due taxes, regressive taxes are imposed hurting the poor and middle class. On the one hand, Pakistan is a country with one of the lowest tax-to-GDP ratio, and on the other, bulk of collection is wasted mercilessly for non-productive expenses—funding monstrous state machinery and luxuries of the elite.

Those in power grab state property under the pretext of rewards and awards (free or at throw-away prices) and pay no tax on it. The taxes ruthlessly collected from the masses are brazenly spent on their luxuries—palatial bungalows, fleets of cars, army of servants, foreign tours and what not. Tragically, citizens whose incomes fall below taxable limits under the income tax law are criminally taxed through the cleverly-woven web of withholding tax regime. Funds, extorted from their hard earned money, are plundered and wasted by the ruling elites while the predatory elites do not pay tax on free or concessionary benefits and/or plots allotted in utter violation of section 13(11) of the Income Tax Ordinance.

During the government of Pakistan People Party (2008-13), an ex-Member of FBR wrote a letter to then Finance Minister, Abdul Hafeez Shaikh, that massive tax evasion/loss of revenue had occurred due to non-taxation of government property/benefits given to high-ranking officials either free or at concessional rates. He took no action and the same was the case when Ishaq Dar took office. Even the Finance Minister, Asad Umar, and State Minister for Revenue, Hammad Azhar, have not bothered to examine the matter till today. All the heads of FBR also remained silent on this issue. Track record of the present Chairman shows that he would be least interested to nab the rich and mighty. Occupying key posts in Punjab under self-proclaimed Khadim-e-Aala, especially as Chief Secretary, he never bothered to ask the concerned secretary to collect agricultural income tax from the rich absentee landlords or property tax from the mighty urban property holders. On the contrary, through his illegal executive order, the collection of agricultural income tax from the rich and powerful absentee landowners of Punjab was suspended. Now as Chairman FBR, it remains to be seen whether he would be able to nab about 3.5 million ultra-rich (these include his colleagues in bureaucracy, politicians, judges, generals and rich businessmen). Till today, he has even failed to force those who live lavishly, to file their income tax returns, what to speak of taxing the ultra-rich and mighty members of the State Oligarchy. 

The people voted for Pakistan Tahreek-i-Insaf (PTI) so that they would take the powerful predatory elite and tax cheats to task. They wonder why FBR has been sparing tax- delinquent elected members (99% of them even did not bother to pay Income Support Levy for Tax Year 2013 even after lapse of 5 years), unscrupulous traders, mighty military and mighty civil-military officers for not paying due taxes under section 13(11) and 39(1)(j) of the Income Tax Ordinance, 2001. Recouping of lost revenues of billions of rupees from them will certainly convey a loud message to all that the PTI Government means business and that nobody is above law. As the mighty sections of society are not paying taxes due from them, the common people argue against discharging their tax obligations, especially when the State has failed to protect their lives and properties, what to talk of providing basic facilities of education, health, clean drinking water, housing, transportation etc.

While the powerful in the Land of Pure live in palatial homes with all free utilities, and enjoy free and/or subsidised facilities of golfing and club life—all these at the expense of taxpayers’ money—the poor are suffering from hunger and malnutrition. About 60 million lack even basic facilities like clean drinking water, sewerage etc. Not only that the powerful do not pay taxes on perks/benefits/plots, there exists within a specific group blatant discrimination. For example, superior judicial allowance of the judges of the Supreme Court and High Courts and almost all allowances are exempt under clause (56), Part I, Second Schedule to the Income Tax Ordinance, 2001, whereas judicial allowance is taxable in the hands of judges of subordinate judiciary. Does this blatant discrimination not call for suo moto action on the touchstone of Article 25 of the Constitution? The custodians of fundamental rights make tall verbal claims but are not ready for a similar tax waiver for their subordinate judges! One hopes that in the forthcoming mini-budget, the government of PTI will try to take care of this!!

___________________________________

The writer, Advocate Supreme Court, is Adjunct Faculty at Lahore University of Management Sciences (LUMS). Email: ikram@huzaimaikram.com; Twitter: @drikramulhaq