Sure, it is scandalous that our rich and elite class does not pay its fair share of income tax, and that agricultural income too remains untaxed. But let us not pretend that such glaring anomalies are easily rectified
Why does the passing of time seems to stretch out in prospect but appears compressed in retrospect? Another year is again about to roll by, almost imperceptibly. Conversely, do not our national woes seem never-ending, with nary a solution in sight?
The mysteries of time have had an enduring fascination for humankind — even more so since Einstein proposed his revolutionary theory of space and time — though the particular conundrum I started this column with is probably no more than a psychological illusion. For, is it not equally fair to say that that the future is upon us before we know it?
Actually, human perception of time is probably a direct by-product of how our memory functions. And that, like other biological functions, may no more capture actual external physical reality than the perception by our visual cortex of light of different wavelengths as different colours. For, colour is not ‘out there’ in the object being perceived; it is in the mind of the viewer. In the same vein, Elliot’s poetic rendering of Einstein’s ideas (“Time present and time past/ Are both perhaps present in time future/ And time future contained in time past”) may well be closer to actual physical reality than our psychologically subjective (but powerful) impressions of time.
But I digress. Fascinating though this subject may be, it was not really my intention today to discuss such esoteric matters. The subject of ‘time’ can wait for another day. My plan for this column was altogether more prosaic: as another year draws to a close, to take stock of where we stand today in relation both to our recent past and our medium term future.
And at first glance — let us admit it — the broad picture is far from reassuring, if not actually cause for great trepidation and concern. On the four great national issues (in my opinion), our collective thoughts and actions seem mired in a time warp. The economy appears to be in directionless shambles, with no firm hand on the till; terrorism and religious intolerance continue to thrive, with plenty of surreptitious (and open) internal support; the democratic system is perilously shaky and discredited, what with the political parties all pulling in different directions in the ruthless pursuit of their own narrow selfish interests; and the army, in the guise of defining and defending our national security paradigms, is back to where it always was as the real centre of power.
Long time readers will note that ‘corruption’ does not, unsurprisingly, make it to the top four in my list of our national priorities. Not that I consider it an unimportant or trivial matter; far from it. Only, I think we need to concentrate whatever collective political energies we can muster to first tackle those problems that are both more ‘doable’ as a practical matter, and are more fundamental to our very existence.
I know that our people and the media, not to mention our politicians and the higher judiciary, seem obsessed with the idea that corruption is our public enemy No 1 (indeed, in separate and independent polls recently conducted by Transparency International and the BBC, corruption was also overwhelmingly perceived as exactly that by people worldwide). But my view remains that you cannot really tackle corruption without doing much else first on a broad front (such as effective police, judicial and administrative reform, an independent Election Commission, strengthening parliament, etc, not to mention an educated populace). If anything, my fifth priority would be a firm political commitment to education.
Of the four top priorities, putting the economy on a sound and sustainable path of growth is, without any doubt, the most important. Without adequate resources little else is possible. And what we need to do here is no high science. But to pretend — as some parties are doing — that such resources (amounting to hundreds of billions of rupees) can be generated by simply eliminating corruption in the Federal Board of Revenue (FBR) and loss-making government corporations, is little better than chasing a shadowy ignis fatuus, the proverbial will-o’-the-wisp.
Of course everyone knows of these terrible leakages. And what a wonderfully magical solution it would be if we could somehow staunch such corruption laden haemorrhaging. But, do you think, as a practical possibility, such holes can be plugged to a reasonable extent, at least any time soon? Has any previous government — remember handing over WAPDA to the army — had any significant success in this matter? Why are we so easily seduced by ‘the perfect solution’ into foregoing piecemeal solutions of the immediately ‘doable’ and practical kind?
Much the same can be said about those other slogans and formulas aimed at garnering populist support, such as breaking free from the shackles of the IMF and the US dependency. Of course this is a most desired policy goal. But it cannot be achieved without first correcting the multiple and deep structural flaws of our political economy that produce gaping imbalances between our national income and national expenditure. And that will take years, if not decades, to address even with the best will in the world. So what are we to do in the interregnum? Ask Ireland, a modern economy that has just agreed to a € 85 billion IMF bailout package. Or ask Greece, Spain, Portugal and others who have been rescued by their Euro zone partners on the condition that they impose savage and deeply unpopular cuts in public services and expenditure (yes, of course, they do not necessarily need to go to the IMF, being able to raise the money in the international capital markets — something we cannot do).
Sure, it is scandalous that our rich and elite class does not pay its fair share of income tax, and that agricultural income too remains untaxed. But let us not pretend that such glaring anomalies are easily rectified. Agricultural tax is a provincial subject; and the real problem is not that the elite rich do not pay taxes, but that the overall tax base is far too narrow. The world over, income tax is the largest single source of government revenue (nearly 50 percent in the UK), but only 1.6 percent of our population is a registered taxpayer. And, in gross terms, far more revenue can be generated from a modest income tax on the comparatively large middle-income trading class and service providers than from a crushing income tax on a small super-rich class.
The need to expand the tax base is undeniable. But this will take time. Nor must we forget that in an underdeveloped country, collection costs and seepage are bound to be high. That means, FAPP, for the near future at least, heavy reliance on indirect taxation remains the only viable option for the state (incidentally, FAPP is an acronym that I wish to promote amongst journalists. Coined by the celebrated Irish physicist John Bell, famous for a fundamental theorem in quantum physics known as ‘Bell’s inequality’, it stands for ‘For All Practical Purposes’). Here is the argument for RGST that everyone is opposing.
I seem to have laboured overly over our economic travails without leaving any space for discussing the other three vital challenges we face that I mentioned. Our situation there seems no different at first glance: a glacial movement at best, if at all. But is that really so? Not in my opinion. Are current appearances superficially deceptive? I think so. Am I optimistic about our future prospects? Most certainly, yes, provided we are prepared to be realistic and not ask for the moon.
But next week’s column is traditionally reserved by me for the annual roundup of the world’s follies. So my reasons for optimism will have to wait, not inappropriately, for the first column of the New Year. – Dailytimes