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A Mature Exercise with Credit to Both Businessmen and Govt

In response to the tough conditions imposed in the proposals for the Federal Budget, the nation’s business community observed a token two-day’s strike throughout the country. The protest was largely successful and remained peaceful. Transport plied normally, banks remained open and small businesses such as restaurants, bakeries, pan shops, medical stores, etc., were not affected. On the government’s part, except for some ludicrous attempts at disinformation and the occasional threat, there were no real ham-handed attempts to break the strike call. Within the limits imposed on its credibility parameters, Pakistan TV grudgingly acknowledged the success of the strike. All in all, this was a very mature exercise on which credit must go to both the sides, the businessmen in maintaining unity in registering its protest in a civilised manner and GoP for restraining its normally more baser urges. Notwithstanding the open-ended provocative threat made by the PM the night before the two-day strike, the expected bite did not follow.

The PM is right on a number of counts, viz that (1) the country needs much more revenues just to keep functioning (2) to keep pace with development more revenues are needed and (3) GoP cannot keep on borrowing to meet the deficit (4) a large number of taxable people are not paying their taxes (5) those who do pay taxes do not pay their just dues (6) there is a need to streamline the tax system so as to generate the revenues that are required by the GoP. However, GoP gives only passing mention to the fact that agriculturists who make up a large percentage of the population are outside the tax net and does not bracket them as “thieves” with the business community. A large percentage of our legislators are agriculturists and why should they pass any legislation requiring them to contribute to the exchequer? Purely on the moral issue of sharing the tax burden equally, successive governments, including Martial Law ones, have failed to implement their rhetoric and will continue to fail unless there is a sea change of attitude that comes up with pragmatic solutions rather than falling back on bureaucratic methods to milk an already ailing cow. Cohesive relationship between revenue generation and expenditure is necessary, particularly in the refurbishing and modernisation of the socio-economic infrastructure. This can only be done by decentralising taxation to the local municipal/council level that will allow communities to use their own resources for their budgetary needs. Instead of provinces being given a share of central revenues, they would be then in a position to contribute a portion. Communities are the best judge of what their inhabitants are worth and each individual must pay according to that scale. Necessarily there has to be a formula that uses a percentage of the revenues generated by rich communities for their not-so-well-off-neighbours. At the same time by lowering the tax base, the tax net will be broadened. Unless a drastic revision of taxation principles takes place, all successive GoPs will face the same problem.

To come back to the present, nothing that the PM has said on the issues is incorrect except that the medium she is using for conveying the message is rather atrocious. Makhdoom Shahabuddin and Ahmad Mukhtar are both novices (Mukhtar’s Services Shoes remained closed in sympathy with the strike), both putty in the hands of the more visible bureaucrat Qazi Aleemullah and the not so visible author of the whole revenue collection proposals, Javed Talat. While Qazi Sahib has a holy history of happily changing sides, Javed Talat is a surprise. A fine bureaucrat of great integrity and dynamism, Javed Talat’s proposed methods are absolutely in line with his years of bureaucratic training, the public needs a cracking of the whip to keep in line. Unfortunately while his tax proposals may be sincere, they will not fill the coffers of the exchequers by much, much more will line the pockets of the taxmen. Not being a finance specialist, Javed Talat probably could not foresee that his proposed draconian measures would land the GoP in a soup and in the reverse momentum may very well undo some of the proposals that should be enacted and implemented to ensure successive GoPs have enough money to run the shop and our children and grandchildren are not consigned to a world debtor prison. A genuine public sector-private sector relationship should have had the political government pay heed to the Federation’s proposals and incorporate those that could be accommodated in a spirit of give and take. In return the Federation should remember that it is in its own vested interest that GoP does not go deeper in debt. As it is, the taxation proposals will cause the present economy, already in depression, to go further down the tube. When an economy is booming, one can get away with increased taxation, when in a slump one has to nurture the economy along without putting additional pressures on it. You cannot kill the golden goose that lays the eggs. Ms Bhutto would do well to look into ‘Ayn Rand’s “Atlas Shrugged” as a bedside reading.

Now that the protest (and GoP reaction thereof) has gone off in a mature fashion, it is time for the PM to take the controls firmly in her hands and listen to pragmatic advice in the national interest rather than in the interest of bruised egos. On their part, businessmen have to compromise in the national interest, as a nation we cannot go on adding to the national debt. Her two political pointmen have been taken for a merry ride by seasoned bureaucratic campaigners, the fallout may mean irretrievable damage to her political standing. She has to react politically to the challenge, compromising on issues remembering that her political demise will not matter one whit to her present bureaucratic advisors, they will simply change their political (or military?) masters and serve them till death do them also apart. To refresh her memory, let her get the TV film clips of the after-budget Press Conferences of former Finance Minister Messrs Sartaj Aziz, Yasin Wattoo, Dr Mahbubul Haq, Ehsanul Haq Piracha, etc. If she does not find that along side these luminaries people of same familiar bureaucratic demeanour, if not faces, accompanying her political neophytes, Ahmad Mukhtar and Makhdoom Shahabuddin on stage, she can sue me for misrepresentation. Madam Prime Minister, take the rein firmly in your hands and put the bit firmly within the Establishment’s teeth. Do use the whip if you have to, not on the public but on their so-called servants.

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