BOMB FOR POOR CONSUMERS IN THE MAKING

SHAMIM RIZVI
(feedback@pgeconomist.com)

Oct 31 - Nov 6, 2011

The cash-starved PPP led coalition government is set to raise billion of rupees from the gas consumers by inflicting heavy taxes on use of gas during this winter to raise additional revenues to meet the mounting expenditures.

For this purpose, the relevant authorities are planning to move a bill in the next session of the Senate and confident to get it approved in view of weaker political position of the coalition partners.

The government, which seems totally unconcerned about the plight of the end users of gas, has been assured that the coalition partners would not create any problems for the government in the passage of the bills with their simple majority in the house.

The hard-pressed government is desperately introducing these bills in the parliament to protect and enrich its own adventure in the gas sector though it has not held any consultation process with the stakeholders, which might lead to public agitation making the job more difficult, an insider told this scribe.

The financial wizards argued that the beleaguered government in this desperate bid simply intend to get the protective cover of parliament for its totally irrational and undue endeavors in the gas sector.

According to the reliable sources, the authorities are planning to raise about Rs40 billion through taxing gas users.

According to an independent economist, this would be a criminal act on the part of the government which would further burden the already hard-pressed common persons-the end consumers.

The industrialists who would use the more expensive energy would pass on the entire burden to the consumers by increasing the prices of their products. According to the economic experts, the financial condition of the state is in extremely bad shape because of massive corruption and bad management.

Growth rate, inflation, debts and liabilities and budget deficit, everything is on its worst in the history of the country.

Due the faulty taxation policies, the government is more dependent on indirect taxation, which puts more burden on the poor common persons rather the rich class including our ruling class of landed aristocracy who are dominating our parliament and the business community making money through dubious and corrupt means.

Independent economists, IMF, and the World Bank experts have repeatedly observed that it was criminal to keep farm income out of tax net, but the powerful feudal lobby always successfully and tactfully defied all attempts so far to bring this highly potential segment into normal tax net.

As a result, the tax to GDP ratio, instead of rising like other countries of the world, is constantly falling and has come down to about nine percent from 13 percent during the last about five to six years.

Agriculture income tax has immense potential to generate billions of rupees as revenue for the government, which can relieve it from taxing gas and electricity.

Imposition of tax on income from agriculture sector has been an issue since the inception of Pakistan, but the grouping amongst the feudal lords, civil and military and military bureaucrats and agriculture technocrats have successfully kept such incomes out of the trajectory of taxation mechanism.

In this respect, India and China remained fortunate as both countries disallowed its citizens to keep agriculture land beyond a specific limit and thereby eliminated feudalism once for all times from their respective countries. But in Pakistan, unfortunately, every voice favoring imposition of tax on income from agriculture has been given harsh treatment by the rulers.

The last example is of the former finance minister, Shaukat Tarin in the PPP-led government, who once vowed to levy agri tax but was so pressurized by the lobby of the vested interests in the government that he had to quit his job. Lately, the present government, despite acute financial difficulties, opted to surrender an IMF aid package because it also wanted tax on income from agriculture in its reform program, which Pakistan was required to undertake as a condition for the aid package.

Despite borrowing recklessly from all possible sources to meet its expenses, the government is least bothered to tax the rich or crack down on black and informal economy.

The incumbent finance minister, Dr. Hafeez Shaikh, lamenting the shockingly low tax to GDP ratio in Pakistan told reporters at a press conference in Islamabad that it was the most difficult task in Pakistan to recover taxes from rich and affluent and influential class. It sounds unbelievable but it is a fact and supported by a report recently published in a leading newspaper of the country that the prime minister and his 25 ministers had admitted in their sworn affidavits submitted to the election commission of Pakistan that they do not pay income taxes. The list of 25 ministers also included the infamous Qayyum Jatoi, who claimed shamelessly in a live TV transmission that "it was their right to earn through corruption". "We have come to power by winning the election and now it is our turn to make money," he said. To promote the tax culture in such a society is indeed an uphill task.