No compass, no map, no will

LAHORE: The lawmakers that pass bills to impose taxes should lead from the front by paying their own due taxes. Legitimacy of the tax collectors’ morale slumps if the ruling elite and legislatures that impose tax themselves evade it.

The steps taken up till now show that the government does not have the will to collect taxes. It has now been proven that the political leadership owns major assets abroad. Still, they are audacious enough to contest elections in Pakistan. The state should at least pass a law that bars individual outside tax net from running for any public office.

Tax evading culture flourishes in Pakistan because a number of influential persons successfully manage to stay out of the net. And these evaders or defaulters of other state levies do not go to jails unlike the developed economies, where no one is immune to it.

Economically, Pakistan is in a very precarious condition. The government seems not to realise the gravity of the situation. It is enjoying the generosity of friendly countries that are regularly pouring dollars into Pakistan’s coffers. No attempt has yet been made to increase revenues. By waiving 50 percent of Gas Infrastructure Development Cess they will certainly collect Rs200 billion of Rs400 billion that have accumulated in the past four years. But this should have been an additional amount that could have been used for development.

The revenues are not increasing, but the government expenditures are. There is no way out but to reduce the expenditure and raise revenues by tasking measures advised by the global institutions.

A word of caution in this regard is that instead of increasing taxes, the government should explore new avenues of revenue collection like property tax, capital gains tax, and agriculture income tax. The 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.

One must accept that the previous government was managing the economy better. The macroeconomic indicators were much better even in the last year of Pakistan Muslim League-Nawaz (PML-N) government.

Incompetence of the current economic managers turned the booming economy they inherited from their predecessors into an unmanageably glooming one.

No visible steps have been taken to strengthen the regulatory bodies. Inclusive growth would come through strong institutions. The nature of growth during past 72 years had been exclusively benefiting only 2 percent the population.

This is the reason why poverty persists in Pakistan even during very high growth periods. Economic planners should formulate viable policies for small farmers, small and medium enterprises (SMEs), and cottage industries to ensure equitable growth.

The mini-budget has provided incentives to the banks for providing loans to these sectors.

The markup rate on these loans would be determined by the banks on the basis of their risk profile. So the markup on these loans is going to be higher than the one they charged big corporate sector.

Economic bankruptcy is the consequence of political bankruptcy in Pakistan. If prudent policies are not introduced soon the economic meltdown is on cards, while the social meltdown has already started due to rising disparities, injustices and high unemployment.

Pakistani planners do not have to reinvent the wheel. Global experience tells us that growth occurs when there is good governance, good economic policies, good institutions, good macroeconomic management, and also good luck.

A declining trend in the international oil prices that provided much needed reprieve was no less than good luck.

The friendly countries have also shown their generosity by providing billions of dollars as loan.

The economic planners should avoid taking whimsical decisions like the ones that cost economy dearly in the past.

For instance we denied a well-deserved fair share to the people of Balochistan in gas prices with the result that the exploration in hydrocarbon-rich province came to a halt. We offered better rates to Qatar and Iran for their gas but deprived our own people of this benefit.