Charity vs Reform

Recently the Chief Justice of Pakistan Mian Saqib Nisar issued a statement about living at the Diamer-Bhasha Dam in a hut after retiring, if that is what it would take to protect it. There is great respect for such heartfelt sentiments, when we see a high-ranking official expressing such views for the good of the country. However, sentimentality should not delude reality. And the reality is — that the Diamer-Bhasha Dam is an expensive, long term project that can not be built on donations alone. The new PM seems to be convinced about CJP’s method to collect the required billions of dollars.

This is not the first time public donations have been advocated as a panacea. Gen Pervez Musharraf set up a similar President Relief Fund in 2005, after the devastating earthquake. Nawaz Sharif started a “qarz utaro, mulk sanwaro” scheme shortly after he was elected in the 1990.  Ironically public debt under him trebled during his last government. There was even a scheme, Zulfikar Ali Bhutto started in the 70s, asking for Rs.1 donations for developmental causes. Needless to say they all failed, without yielding any tangible results. The reality is simple: mega infrastructure projects cannot be funded by charity. Regardless of how noble the intentions behind it are.

The problem with collecting charity is that it distracts the government from collecting taxes. In a country where only one percent of the population pays direct taxes; perhaps it would be more fruitful to concentrate on substantial tax reforms instead. Improving our tax system should be number one priority. Expanding the current tax base is crucial, which is to say, enforcing strict measures against commercial, government, and private sectors who have been evading taxes for decades. Rather than the current tax reform agenda that merely increasing the tax burden of those few Pakistanis, who are already paying their taxes. Tax reforms can provide solid foundations for not one or two mega projects, rather all future projects to come.

A recurrent theme in Pakistan’s economic history, are the short-term populist schemes that inspire many, yet deliver little. Collecting a set amount, through donations is just another example of a quick duct-tape fix; which we have seen failing in the past. The challenge for us now is to devise long-term reforms which can outlive the tenure of governments, and build a robust economy and society for the succeeding generation.  *

Published in Daily Times, September 10th 2018.