Taxing the taxed…Faisal Bari
FOR all the rhetoric of this government and its banker finance minister, the budget has been a huge disappointment. It is the same old story of taxing those who are already in the net while appeasing those who are strong and giving them opportunities for looting the country or keeping their loot.
Commenting on the situation, an editorial in this paper, published on July 2, states: Speaking at a news conference on Sunday, Mr Aurangzeb could only express his condolences to the salaried class on the higher taxes he had imposed on them. The condolences should be offered to the finance minister and this government. Form 47 or not, people do not and will not forget.
This government has again taken the easy route. It has raised taxes for those who are already in the tax net, especially the salaried class, but has not been able to tax powerful interests who have always evaded taxation: retailers, agriculturists, real estate owners and speculators, and service providers who are not in the net. The salaried class will pay 35 per cent in taxes and those with an income of Rs10 million or more a year will pay an additional super tax of 3.5pc. The inequity of the system has only increased and the minister and this government have played their part in further eroding its legitimacy.
A friend in need of an emergency operation had to deposit Rs1m in cash at a private hospital counter as fearing documentation and evading taxes the hospital did not want to get money through a card machine. They were reluctant to give a receipt. Most doctors in the private sector that I have been to have similar protocols. Where are the initiatives to bring such people into the net?
A low tax rate has been imposed on real estate but then defence forces personnel and the employees of federal and provincial governments have been exempted from these taxes. Are private citizens of this country not citizens? Dubai Leaks talked of thousands who have money and assets in Dubai. Has the government even bothered to look into whether this money was legitimate and if it was sent to Dubai through the proper channels? Is the state not supposed to look after the interests of its citizens? The punishment for tax evasion has been raised, the powers of FBR officers have been increased when everyone knows that, along with the police, FBR is one of the most corrupt institutions around. The state has clearly turned predatory.
How can the government justify such taxes when its expenditure priorities are so anti-people?
The inequity does not end here. The government has made no effort in the budget to cut its expenses. In fact, most non-productive expenditures have increased. Hundreds of billions of rupees in subsidies are given to privileged sectors and groups, government employees are given free electricity and petrol, hundreds of billions of rupees worth of perks and privileges, including cars, houses, subsidised travel and club fees, are given to the privileged. All the while the poor struggle even to pay their electricity bill. A colleague who runs the kitchen in our office and has two fans, some lights and a refrigerator at home has a bill of Rs22,000 from Lesco. The gardener at our place received a bill of Rs23,000. And the government is celebrating having given the citizens a people-friendly budget!
The rot runs deeper. The salaried and those in the tax direct and indirect net, pay about half or more than half of their income in taxes. And what do they get in return? Nothing at all. They have to send their children to private schools, they have to go to private hospitals if they fall sick. If they want safe drinking water, they have to buy bottled water. Law and order is poor, justice is hard to even access, and the police and the army act as if citizens are criminals. Despite paying through their nose, citizens get load-shedding and lectures from the government about the virtue of sacrifice. What a country.
If the poor and needy were being provided a decent education, healthcare and other basic necessities by the state, one could still argue that though the salaried and those in the net were being taxed excessively, the money was being used well. Instead, 26m children are out of schools in Pakistan. Pakistan is the only country, other than Afghanistan, which has not been able to eradicate polio. Forty per cent of our children are malnourished, and we continue to have one of the highest infant and maternal mortality rates in the region. We are near the bottom of the ladder in terms of gender parity, when compared to other countries. Think of any statistic, especially pertaining to human well-being, and we will see that we are amongst the worst performers. How can the government justify such taxation when its expenditure priorities are so anti-people?
It is true that the economy is in a bad shape and the government needs to raise more revenue. But the economy will not be in a better place if we keep taxing those who are already in the tax net while giving specific interest groups all the breaks they can have, and the economy will not improve if expenditure priorities are not changed to make more investments in people.
If the people of Pakistan do not have education and skills, if they do not enjoy decent healthcare, and if they do not have access to safe drinking water and proper waste disposal facilities, how can the economy be taken on a sustainable high-growth path? Sadly, this budget clearly shows that the government has chosen the short-term path rather than the longer-term, more sustainable one. The economy will improve for a year or so, if at all, but this is not the path to sustainability. The budget has also confirmed, for many, that this government, like the ones before it, does not have the stomach for working out and implementing the needed reforms.
Courtesy Dawn