Taxes, not charity!

Huzaima Bukhari

“We don’t do charity in Germany. We pay taxes. Charity is a failure of governments’ responsibilities”—Henning When, a German stand-up comedian

Imagine a middle-class household of six, comprising parents, three grown-up healthy boys and the youngest, a physically incapacitated girl requiring special attention. With the presence of such a person in the family, usually one needs extra money to meet her peculiar demands. As long as the parents are alive and financially well off, there may not be any issues but how would the disabled be taken care of once they are no more? It may not be necessary that all the boys boast of good earnings. This means that one may be better off than the other. Greater possibility is that collectively they would attend their sibling in a befitting manner without her feeling the parents’ loss. The question is, would these acts of kindness and money spent, amount to charity or show of fraternal love for their sister? Many would respond positively to the latter striking away the former with disdain. How can one ever think of charity where the next of kin is concerned?

The idea behind the above proposition is that the three dutiful brothers who may have different income levels when united can, according to their capacity, contribute to the common pool for maintenance of their sister. Instead of burdening just one, joint responsibility undertaken by the brothers in terms of money (never considered as charity) and time can make the life of a person with disabilities easier without hurting her self-esteem. One can raise the question, what if the brothers were not in a position to manage their sister’s problems? The only remedy left to them is to either improve their resources in order to provide for themselves and their sister or go around with a begging bowl in the hope that some charitable entity would heed to their demands. The second way out is not only uncertain but can also have a devastating effect on their personalities.

Any given country can be likened to a household where the population is divided into multiple segments in accordance with their various abilities, capabilities as well as disabilities. An efficient government knows how to manage in a way that enables each of its citizens to lead a normal and respectable life. It strives to strike a reasonable balance between the haves and the have-nots, between doers and idlers, between the obedient and the defiant, the educated and the illiterate but above all it attempts to mobilize its citizens to add to the economic resources through growth, investments, savings and most importantly—taxes.

Taxes are the backbone of a country’s economy as these help to meet day to day expenses for running the government’s machinery, for developmental projects, for maintaining the profitability equilibrium of commercial enterprises to discourage monopolies and create a level playing field for all types of entrepreneurs, to enable equitable distribution of wealth so that the rich do not get richer and the poor, poorer.

Democratic governments are not supposed to snatch or steal from the citizens nor are they supposed to intervene in their private/commercial affairs. Governments facilitate and regulate, of course with the help of their people to improve their lot and contribute towards national prosperity by paying taxes. The idea that charity can help alleviate suffering and relieve the poor is quite preposterous since it relies on the whims and discretion of the donor. Take the case of micro-financing. A little amount of money is given as loan to run a very small business that barely allows a person to make his ends meet. This implies that a few hundred thousands will always remain at a marginal low level of income with hardly any chance of reaching a bigger scale. Contrary to that, setting up an industrial unit and taking on board as shareholders those very borrowers can not only enrich their lives but even those who would be associated with that concern and this would also mean better growth as well as more revenue in the form of taxes for the country.

A quote from the biography of Britain’s one time prime minister (1945-1951) Clement Attlee is quite thought provoking. He says: “Charity is a cold, grey, loveless thing. If a man wants to help the poor, he should pay his taxes gladly, not dole out money at a whim.” In Pakistan, while the government pleads its people to pay their taxes honestly, there is no dearth of philanthropists. As a consequence, during this period of crisis brought upon by the Covid-19 pandemic, the Pakistani government has resorted to beseeching the super-rich to donate towards a special fund established for this purpose. This is the height of an irresponsible government that has persistently failed in performing its functions efficiently! Wryly, most of the proud donors who appeared publically promising heavy amounts of money are ones who engage expensive consultants to ‘legally’ arrange their financial matters in such a way that they are subjected to minimum possible taxes.

According to Owen Jones, a Guardian columnist, “Philanthropy is a dangerous substitution for progressive taxation.” Rather than adding billions to the funds of a few non-governmental organizations that could be addressing problems of a miniscule percentage of people, the government treasury needs to be filled up substantially to be used for the vast majority and more specifically during emergency situations. This would, however, mean that those who want to cultivate close relations with the men in power by making their presence conspicuous through donations would become lost in the multitude of taxpayers.

There is a need to understand that charity, despite being a noble act has limited value. We may have been indoctrinated to believe that by giving alms we will earn a high place in heaven but this must come after absolving ourselves of our national duty. The former cannot take precedence over the latter. A dishonest citizen who cheats the authorities but doles out large sums of money in charity cannot be forgiven in the same way as the government that fails to efficiently utilize taxes paid by the honest.

Time and again, people justify tax evasion as a means to avoid enriching a corrupt and incompetent government taking the plea that what authorities cannot do, they could do in the name of charity. This mindset has to change! Empower the government, to such a degree that it is able to reach every nook and cranny of the country and ably fulfill its obligations to the people. Make the government transparent and responsible through participatory democracy [known in political economy as ‘open government’]. Only this transformed attitude can turn around the destiny of any country, let alone Pakistan.

_____________________________________________________________________

The writer, lawyer and author, is an Adjunct Faculty at Lahore University of Management Sciences (LUMS)