High cost of low governance

LAHORE: Regulations on their own -- without good governance -- do not bring much good since the corrupt continue to bypass all regulations and increase the bribe amount they were charging earlier from their ‘clients’.

No reforms have ever worked if the governance bar is low. Good governance in itself is not rocket science and in the current technologically advanced world it can be practised with ease. Governance in Pakistan today is based on punishing a manufacturer who under-filed production but not taking action against the government official posted to monitor his production. Good governance would hold accountable both the tax evader and the person with whose connivance the tax was evaded. Reforms become redundant when an official is not asked to account for bypassing rules and regulations. In this culture, each reform results in a progressive increase in bribes.

The Punjab government for instance has announced penalties for excessive use of water in residences, commercial premises and industrial concerns. By this standard, almost all residences with lawns, as well as car washing outlets and numerous industries should be fined on a daily basis. In reality, though, only a few have been issued fine notices while the majority operate as usual. The only difference is that earlier they were not under the scrutiny of the water and sanitation agencies but now they are. They have to pay rent to avoid the fines. Thus a new regulation has added a new rent-seeking avenue for bureaucrats.

Power theft in the country was a norm 15 years ago, with line losses of power distribution companies of Pakistan averaging over 19 per cent even when the power tariff was very low. Line losses or power theft have inched up a little but the tariff is almost 10 times higher. For the last five years, the government has been periodically announcing action against power thieves but theft has not come down.

This theft occurs with the connivance of the power company’s staff. Their monthly rent for abating theft continued to increase after each increase in power tariff. And it further increased each time the government announced a drive against power theft on the plea that it had become riskier to abate theft. In fact, we see no reduction in power theft.

Encroachments are a headache faced by all citizens -- pedestrians, shoppers, commuters or drivers. Despite periodic actions against encroachments, their intensity has increased instead of declining. Encroachments are allowed on roads, bazaars and pedestrian walkways by those that are assigned to eliminate them against a rent that increases when a strong anti-encroachment campaign is launched by any government.

Sales tax evasion has remained a problem in Pakistan even in sectors that are registered under the sales tax regime. Sales tax evasion has increased with every increase in the sales tax rate which started at 7.5 per cent before 1998 to 17 per cent now. The officials that abet in this regard adjust their rent with every increase in the sales tax rates. The technological solution of monitoring production and sales electronically has till now been successfully avoided by the bureaucrats who are beneficiaries of the current practices.