LAHORE: The dilemma in Pakistan is that the MNAs who pass bills to impose taxes are not leading from the front by paying their due taxes. The legislature loses its moral authority if its members are not paying taxes according to their income.
Agriculture tax is imposed in Punjab and Sindh on income generated from land holding of over 50 acres, but the provincial governments do not dare to collect it from the feudal. Instead of properly taxing the agriculture income, the government took the imprudent decision of generating revenues from agricultural inputs like fertilisers and pesticides.
Instead the government should have gone for taxing incomes equally, including agricultural income. The taxes on agricultural inputs increase the cost of production for farmers, particularly the small farmers.
Many of them use less than the required quantity of inputs as they lack resources. Many use no inputs like fertiliser or pesticides. Their productivity is obviously less than half of the productivity of large farms that use proper input.
The big farmers thus go on increasing their wealth while the poor farmers live in chronic or permanent poverty. The government should provide relief to the small farmers by withdrawing taxes on agricultural inputs and tax the big landlords properly to recover the revenue loss. Incompetence of the economic managers of the present regime turned the booming economy left by the previous regime sick and unmanageable. Economic managers of the present regime are more interested in finding faults with previous regime and lack the vision to move ahead.
Wrong policies, absence of merit and nepotism has eroded the confidence of the investors. They are running the government by borrowing money instead of generating resources. The benefits of better ranking in World Bank’s Ease of Doing Business has been offset by the extra ordinary increase in cost of doing business. The costly dollar, high inflation and high mark-up has made business operations more expensive.
Consumers are suffering more than the businesses because their incomes have mostly declined or stagnated while prices of numerous items have increased by 30-50 percent. Social injustice and economic deprivation breeds discontent that could in extreme cases lead to terrorism. All sensible governments ensure that at least food is available to the common man at affordable rates because a hungry man is more dangerous than any diehard criminal.
However, when hoarding of all food items like wheat, rice, potato, onion, garlic and ginger is tolerated by the state the food prices would then be determined by the hoarders which of course would be out of reach of a large section of society. All this is happening in Pakistan.
The private sector is equally responsible for the economic stalemate. They lack entrepreneurship, they lack ideas. Resources are not essential for growth in modern times. Minds trigger growth.
Countries get poor not because of resource gap but because of a lack of ideas. Hundreds of sick mills in Pakistan ignored risks to an enterprise that are interconnected with supply of capital, disruption of markets, and volatility of values. Addressing the credit market and operations of banks are posing problems for most of the manufactures. This means companies have to go back to the drawing board to identify, assess, manage and structure risks. All this while, insiders benefiting from bad governance would prefer to maintain the status quo.
On the front of efficient transport and communication infrastructure, there are anomalies as well. Efficient infrastructure reduces the cost of production through fewer transactions, timely delivery of raw materials, and less wastage during transportation.
Railways all over the world are considered more efficient over road transport in the long haul. In Pakistan, it was the primary mode of transport till seventies.
Since then its share has declined due to the shift in government’s preference to road over rail transport. After the creation of National Logistic Cell (NLC) to clear the goods from Karachi port, Pakistan Railways (PR) has always found it difficult to regain its historical position.