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January 14, 2018

When taxes rob people


January 14, 2018

There are legal ways of robbing people. This form of robbery takes place on a daily basis across the globe and in our country – especially through the government.

Let’s consider a few recent instances that reflect what happens to the people of this hapless nation on a daily basis. Last year, I ordered some products over the internet and paid all the shipment charges when I made the purchase. When the goods finally reached me, the postman handed me a statement of charges that amounted to more than Rs3,000. Some of the charges (like warehouse charges) were fairly standard. However, more than half of the amount constituted a ‘refugee tax’.

The postman was of the view that it was the government that has ordered them to collect this charge. My queries to the customs office and the FBR did not provide any information about this mysterious new tax. At most, the response that I have received is: ‘oopar se order hoga’ (It’s probably an order from the government).

Mysterious taxes of this nature tend to surface through various public means, such as in the provision of services (electricity bills, for example). The FR surcharge, the Neelum-Jhelum surcharge as well as the PTV and TR surcharges have already been extracted from our pockets for using electricity provided by the government. There is little or no public information or justification for these charges.

If we look beyond the undisputed fact that we are being robbed through these levies, we’ll notice that most of these taxes are illegal. In Pakistan, any new tax has to gain the approval of the National Assembly before it is imposed.

Of course, the government’s income from these taxes would be celebrated as an increase in tax collection – a presumed indication that the government’s tax collection apparatus is operating efficiently. It would also be hailed as a success of the government’s reform efforts. But the reality is that this ‘success’ comes at the cost of Pakistan’s citizens, whose means of subsistence are being squeezed further. Since most taxes fall into the category of indirect taxes, the burden disproportionately falls on the middle- and lower-income households. One consequence, among many others, is that income inequalities within society are further exacerbated.

Above all, what this tells us is that the government struggles to use policies to the benefit of the people. Governments across the globe have used trade to the advantage of their citizens. Just take China and India as an example – two of our immediate neighbours and now global powers. The remarkable story of their rise to global stardom is largely built upon trade. And it is trade that has helped billions of their people to escape poverty. Their governments and policymakers were successful in using trade to their advantage. But in our case, trade is becoming an avenue to extract more money out of our pockets.

If the government cannot afford to implement projects, why is it going ahead with them? We have been subjected to the Neelum-Jhelum surcharge for over a decade or more. The Neelum-Jhelum Hydropower Plant project, which was approved in the 1980s, was supposed to be completed in the early 2000s. However, we’ve now entered 2018 and the project has yet to be completed. So whose fault is it? Why are electricity consumers being charged for the delay and the astronomical rise in its costs? Somebody must have been responsible for this debacle. Shouldn’t they be charged? This fact also rings true for all other government projects, which are financed by the taxpayers’ money.

The underlying issue is the power of the government to tax its people. Over the recorded history of human existence, the nature of this power has gone through variations. In the days of absolute monarchies, this power came without the consent of citizens. But in modern nation-states and democracies, this power reflects a tacit agreement between the citizenry and their rulers (the social contract). This agreement imbues the rulers with the authority to impose taxes and collect them. But it also comes with the obligation that the government will provide basic services to the people, improve their standard of living and take steps to make life easier for them.

Unfortunately, this agreement has been frequently violated by those at the helm. This is what has led many men of letters to fear and challenge the monopoly power of their governments. Most people are aware of the famous Magna Carta, which was an agreement between the king of England and his subjects to limit the monarch’s monopoly of power. Thomas Hobbes’ Leviathan also spoke of the government’s excesses and the harm that it inflicts on people. Going further back in time, the Roman institution of ‘Tribunes’ came into being in order to check the monopoly of the Senate and the Roman emperors.

A government without any checks and balances can rob its people at will. Since it has a legal mandate, it can do this under a legal cover. These elements cannot be apprehended until there is an institutional arrangement to control how they abuse their mandate. Governments exist so that our problems can be lessened and our lives become a little easier. But our everyday lives are being increasingly subjected to legal robbery.

The writer is a freelance contributor.

Email: [email protected]

Twitter: @ShahidMohmand79

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