Floods and the need to tax the elite

an interactive dinner, the representatives of non-governmental organisations (NGOs) complained to Prime Minister Yousuf Raza Gilani that there was a lack of co-ordination and monitoring of relief and rehabilitation work in the flood-affected areas. They stated that entire villages were being ignored in terms of relief activities and urged the government to revive the local government system.It is, however, unfortunate that the decision to revive the local government system has now assumed a political dimension that is unlikely to be resolved any time soon. It would have been preferable to iron out its partisan flavour and improve its ability to deliver at the grassroot level rather than to let the Ordinance lapse. The tendency of our politicians to erase several worthwhile projects launched by their predecessors in a fit of pique, instead of taking ownership, for example the project that literally ended child beggary in the province of Punjab, needs to be urgently revisited.

There are also charges that the Watan Cards envisaging an immediate cash payment of Rs 20,000 to each affected family, with the federal and provincial governments sharing the cost equally, are being given on the basis of political affiliations. Protests have been shown live on television screens where the distribution of these cards has left several of the disadvantaged, including the old and the infirm, injured in their quest to get the cards. To ensure distribution in a transparent manner, there is an urgent need to set up a mechanism that would ensure that these cards are distributed fairly. In this context, it maybe appropriate for dignitaries, including the President, the Prime Minister and any member of the federal cabinet, chief ministers or any provincial minister to desist from handing out these cards in a ceremony that focuses attention on the dignitary, instead of the plight of the hapless flood victims.

Federal Finance Minister Dr Hafeez Sheikh, who was also present at the event, reportedly stated that “when the government talks about a tax on big landholdings my colleagues sitting in parliament oppose it, the brokers are against a tax on capital gains and people are not willing to pay taxes on their costly homes.” The finance minister was stating the obvious, as indeed, the reticence of the ruling elite is a big hurdle in the way of broadening the income tax regime.

The civilian governments alone are not guilty of refusing to tax the rich, the military dispensations too, who held the reins of power for nearly half the life of this country, were equally guilty in this respect. This statement does lend support to a frequently highlighted Business Recorder proposal: the country needs a finance minister who is either a political heavyweight in his own right or, enjoys the implicit/explicit confidence of the political and military leadership, so that he can say no to their demands and his refusal will hold sway.

He should have the political clout not only to coerce his own cabinet colleagues on board in terms of the levy of a tax on income from agriculture, but also the rest of the parliament. It is indeed unfortunate and best reflects the disturbing fact that our parliamentarians’ personal financial agenda takes precedence over the needs of the country that accounts for their losing the golden opportunity to allow the federal government to impose a tax on farm income during the more than a year long deliberations by the constitutional reforms committee.

Be that as it may, one would have hoped that the Finance Ministry had proposed that the provincial governments impose a farm tax and, like in the case of the revised general sales tax, allow the Federal Board of Revenue to collect it on their behalf. There is no evidence to suggest that the Finance Ministry is even considering such a proposal at this point.

The increasing criticism heaped by not only the multilaterals, but also by the Friends of Democratic Pakistan about the need to energise the tax system of this country with a view to ensuring that the rich pay taxes, however, fails to focus on the corruption rampant within the tax collecting agency, namely the Federal Board of Revenue. This perhaps explains the reluctance of a number of industrialists and successful traders to pay taxes and their eagerness to make generous contributions to charities.There is also the general perception that the federal government’s expenditure priorities need a revisit, for example there is no need to get bullet-proof cars for the cabinet members at present, when 20 million people are homeless due to the floods, and there is corruption in other allocations as well. Thus, there is a need for the Finance Minister to first try to clean his own house prior to lamenting the fact that the rich and influential do not want to pay higher taxes – Brecorder