Wizards with flaws

LAHORE: The government says it has got no magic wand to transform the economy overnight, but it does have the baton of the law, which it is also unable to use to ensure steps towards turnaround.

The ruling party is aware of the problems faced by the economy and their possible solutions. They know that governance needs attention but instead of improving it has deteriorated during the last three years. They concede that state-run enterprises are causing huge loss to the exchequer but in the last three years they failed to either improve their performance or privatise them.

They are aware the power theft and inability to collect 100 percent billed amount is the root cause of high power cost; yet instead of addressing it they have been regularly increasing the power tariff. Still the circular debt is rising.

They have ruined the bureaucracy by implicating them in cases that they failed to prove in courts. They have also been publicly insulted. The uncontrolled price hike of almost every commodity is the result of dysfunctional bureaucracy. Restoring the confidence of bureaucrats would be an uphill task for the rulers that do not appreciate sane advice of the public servants. The rulers want their orders executed immediately without bothering for rules while most of the bureaucrats were implicated by them for minor violations of rules during past regimes. Now the bureaucrats want to go by the book not daring to use their discretions that could be used against them in future.

We also feel isolated internationally. The European Union resolution against Pakistan is one example of our failed diplomacy. The present governor Punjab Chaudhry Muhammad Sarwar was instrumental in convincing the European parliament in granting GSP-Plus status to Pakistan in 2014. Why is his influence in the EU not utilised this time?

Economy is the major problem of the country. Ordinary Pakistanis know that Pakistan is a poor country where it is impossible for most of them to make both ends meet but our ruling elite operates with a mind-set of overseeing a wealthy state. They live lavishly in mansions. They regularly increase their salaries, perks and privileges. They use state facilities lavishly while propagating their austerity mantra. We need many times more revenues than we generate.

Austerity means controlling all unnecessary expenses yet we see the size of our budget increasing every year only to finance non-development expenses. We have been borrowing for too long. Now the limit has come. The state will have to curtail its expenses drastically. We have failed to streamline government affairs despite having an army of advisors, ministers and special assistants. This government once talked of closing the Information Ministry but ended up operating with more spokespersons and media experts than ever before. The ministry of energy has been carved to accommodate the former finance minister.

The tax revenues stood below the revenues generated in the last year of the previous government. Only this year the revenues have increased by 10 percent that means an average increase of 3.5 percent per year of this government. Yet we are celebrating it as if we have landed on Mars before Americans. We need 150 percent more revenue than we are generating. The potential for increase is there but the will isn’t. We fail to tax luxury. The palaces built over 1,000 square yards should be heavily taxed. The residents spend more in a day than the tax they pay on those residences. The Raiwind palaces of Sharifs, the Banigala resort of Khan and the Zardari places spread around the country should be paying millions of rupees each as property tax. These residences occupy land sufficient to accommodate 1,000 affluent middle-class families.

These 1,000 families living in 500 square-yard houses pay more property tax than the political elite. There are hundreds of similar posh residences that should pay many times more than they are paying now. When those that impose taxes are properly taxed they would spare no effort to tax all tax evaders. The tax on luxury cars similar to one imposed by Shahbaz Sharif in his first tenure should be imposed throughout Pakistan. That luxury car tax was defeated because the car owners got their vehicles registered in other provinces. It should be done on a yearly basis.

The nexus between the tax collectors and tax evaders would only be broken when the elite is properly taxed. The posh residences should have one or maximum two power connections only. Currently the posh residences have up to 25 single phase connections. The tariff on these connections is half the tariff on three phase connection up to the consumption of 300 units. These house owners save millions in tariff by managing their consumption on 25 low tariff connections. This tendency shows the mentality of the elite to save money by any means.