Rectifying the 18th Amendment

In theory, the 18th amendment sounds progressive, almost revolutionary. However, instead of being revolutionary it has proven to be retrogressive. It has impeded economic and political growth and perhaps even societal evolution. We forgot that the whole idea of running societies efficiently, which is good governance can be thwarted by senseless devolution. There is nothing wrong with devolution, but if it is not organized and structured, it can bring a country’s economy to its knees. One just has to remember that over devolution led to the disintegration of the Yugoslav state. In Pakistan, before it goes too far, we should try and correct the process. The evidence indicates that the 18th Amendment has created more problems than it has solved. It has exposed the provincial governments’ lack of clarity and competence.

Those who continue to support the 18th amendment need to take a closer look at the confusion it has created. The Chairman of the Pakistan Economy Watch (PEW) Brigadier (r) Muhammad Aslam Khan summed it up best.

“It has divided the taxation system in an unnatural way hampering documentation of the economy, helping the undocumented economy and increasing the cost of doing business for the business community. The amendment has resulted in a unique Value Added Tax (VAT) in Pakistan in which goods are taxed by federal authorities while services are taxed by the provincial authorities resulting in confusion.”

In short, the 18th Amendment is a casserole of contradictions that needs to be restructured urgently. One can hear the ‘bleeding hearts’ of the pseudo intellectuals, claiming that the provinces’ are once again being downgraded and denied their rights.

However, if those people could compartmentalize and put their ‘ideology’ aside, they would find that the 18th Amendment as it stands has damaged the economic, educational, and health sectors. It is clear that the provinces’ do not have the capacity or the wherewithal to implement all their responsibilities.

It is heartening to see that the Prime Minister is aware of the anomalies of the 18th Amendment and the system. Back in June of this year he held a press conference in Karachi where he highlighted the drawbacks of the 18th Amendment and the ninth NFC (National Finance Commission) award. For Prime Minister Khan, there are underlying issues with the NFC award that need to be corrected- “What kind of system is this that under it the Federal Government goes in Rs 700 billion deficit after paying 65% to the provinces and over security and debt servicing, we start with Rs 700 billion deficit...this is unfeasible.” The Prime Minister now realizes that in order for Pakistan to reach its true economic potential, his government must rectify the weaknesses in the 18th Amendment.

Thankfully, the Prime Minister has taken a significant step by appointing Dr. Hafeez Shaikh as the minister for finance. As an advisor, which Shaikh previously was prevented him from heading government bodies. The legalities, which the provincial ministers were quick to point out hamstrung Dr. Shaikh from carrying out certain facets of his job. It’s like hiring a batting coach, and telling him that they can only coach right-handed, and not left-handed batsmen.

Most importantly, his new role now means that Dr. Shaikh can be a member of the NFC. There is no doubt that if the finance minister is given room and not badgered by inept provincial politicians, he will be able to operate with greater practicality. The fact that Dr. Shaikh and his team have already made a positive impact under such strenuous circumstances is extremely admirable. Time and again, we have seen smart and qualified professionals like Dr. Shaikh deliberately being held back by power hungry politicians. It is crucial that the Prime Minister continues to support and protect his financial team. It is the Prime Minster’s job to keep the charlatans at bay and create an enabling environment that his economic team needs.

Dr. Shaikh and his team will make it a priority to redress the lack of coordination that currently exists over the 18th Amendment. The provincial governments must remember that the center has no intention of scrapping it. It is merely suggesting important changes that need to be made. For Pakistan’s democracy to succeed, it is crucial that the center and the provincial governments seek to build cohesion, and not constantly be at odds.