Daily Times

All annual budgets, especially tax proposals through finance bills, strengthen elitist structures. Our elitist economy serves the rich and offers little for social mobility of the deprived classes. Contrary to what is commonly understood, elitist structures are not represented merely by a handful of individuals controlling state institutions and enjoying extraordinary tax-free perks, perquisites and benefits. These structures reflect in all sorts of discriminations: in taxation, extorting money from the poor for the benefit of the rich, in academics, non-availability of quality education, and in medical, proper health facilities for all, crony capitalism creating monopolies, denying finance to brilliant young entrepreneurs for starting and competing with established businesses, rent-seeking opportunities created through state policies for the politicians in power and non-providence of social services to the masses.

The Constitution of Pakistan in its essence is egalitarian, but exploitation of all kinds continues unabated though Article 3 says otherwise. Today’s Pakistan is captive in the hands of indomitable military-judicial-civil complex, landed aristocracy, industrialist-turned politicians, wealthy traders, ulema (pseudo-religious scholars), pirs (so-called spiritual leaders), media tycoons and a powerful clique of anchors. Flouting the rule of law with shameless impunity is their hallmark. They openly indulge in vulgar ostentation of money and power to prove that they are the actual owners of the state.

Pakistan’s economy serves only the privileged classes. The military-judicial-civil-complex, politicians and absentee landowners represent less than one percent of the entire population but enjoy unprecedented perks and benefits at the expense of taxpayers’ money. In the budget 2018, their tax rate is reduced to a ridiculous level. A rich individual in the next financial year (2018-19) will pay only 10.8 percent of his total income of Rs10 million. A partnership firm for the same income will pay 20.8 percent and a company 29 percent.

The unelected finance minister through these amendments wanted to discourage business entities and enrich the already wealthy individuals for years to come. The outgoing assembly, having no mandate for the next year, is being asked to vote on this bill. This is serving and preserving elitist structures. The rich-poor divide through such erratic tax measures will further increase. There will be more concentration of wealth in a few hands. Growing inequalities in income and wealth are a serious issue in Pakistan, and through such pro-rich tax measures, we want to aggravate it further.

The state is obliged under the Constitution to provide free education and arrange health care for all. All the governments, federal and provincial, are not fulfilling their constitutional obligations and have given free hands to private parties to fleece people in the name of providing health and education. There is no will to tax these commercial ventures and spend money on improving public schools and hospitals. Officials squander the meagre funds allocated for these sectors — students and patients get raw treatment in government-run schools and hospitals. On the other hand, clubs, golf courses and rest houses serving upper echelons receive grants from public funds.

Sufferings of Pakistan’s poor and less privileged classes will not end unless elitist structures are dismantled and the society is restructured on the principles of equity, fairness and justice

How public servants thrive on the taxpayers’ money and exploit foreign funding is an open secret. Most of them get USAID and other agency scholarships to attend elite universities in the United States. I have met several of them and could not stand their elitist views and sense of entitlement. They actually believed that they deserved these scholarships and junkets. Their children born during a stay abroad automatically get the US citizenship.

When back with their families to lord over poor Pakistan, their children go to the finest schools and live in the public estates nobody in the West can imagine. After high school, the US-born children apply to the finest universities in the US and get not only admissions but also financial assistance as they fill out financial aid applications and only provide information about their parents’ nominal salaries in rupees and not the full monetised value about the other perks, privileges, and plots their parents have. They are given free rides in American universities because of the apparently extremely low-income households they come from. After graduation, they stay there and easily get jobs because they are Americans, thus providing a comfortable beachhead for their ‘poor’ parents. These are the real fruits of elitist structures that are not available to the common man’s children of the country.

Thus no wonder that in Finance Bill 2018, not a single tax is levied on the rich and mighty to bridge the fiscal deficit of over nearly Rs2 billion. On the contrary, taxes are raised on the poor and the middle class. At the same time, shameless borrowing from banks and elsewhere continues to push the nation towards the darker abyss of the ‘debt prison’. The foreign debt alone is now over $90 billion. The elites are happy as their life is not affected by any taxation — rather they are enjoying more benefits and perks from free plots to free club facilities, all financed by the poor taxpayers. From 2018-19, none of the higher income earners will pay more than 15 percent tax.

Sufferings of Pakistan’s poor and less privileged classes will not end unless elitist structures are dismantled, and the society is restructured on the principles of equity, fairness and justice — the fundamental elements of constitutional democracy. The problem of Pakistan is not the scarcity of resources, but its unequal distribution as well as incompetence in exploring and managing them, lack of an effective judiciary and socio-economic injustice.

Pakistan can easily collect taxes of Rs8 trillion without levying any new tax or raising the rates of the existing ones — see details in Raising taxes of Rs. 8 trillion, Daily Times, 12 November 2017. This level of collection is possible, but as a first step, we will have to monetise all the perks and perquisites of judges, generals and civil bureaucrats who must pay tax on fairly-determined ‘consolidated pay package’ as others are doing. Consolidated pay packages for them according to market wages would reduce corruption, remove the sense of elitism and improve governance. For politicians and judges, an independent and effective accountability organ is necessary. Without these reforms and ‘municipal self-governance,’ we cannot hope to achieve rapid growth ensuring job opportunities for millions of young people, whose frustration is on the rise with every passing day as elites show apathy towards them and enjoy luxuries at the state’s expense. This can push Pakistan to complete chaos and collapse. This is a wake-up call for elites lest it is too late.

The writer is Advocate Supreme Court and Adjunct Faculty at Lahore University of Management Sciences (LUMS). Email: ikram@huzaimaikram.com; Twitter: @drikramulhaq

Published in Daily Times, May 20^th 2018.