Unfair tax imposition in G-B

Strike after strike is shaping up the politics in Gilgit-Baltistan (G-B). In the freezing temperatures, the business community backed by various religious and political parties has been up in arms about the taxes imposed one after another by successive governments over the past decade.

While people in this ‘constitutionally ambiguous’ — as it still awaits provincial recognition — region have been paying indirect taxes for decades, it was the Pakistan Peoples Party (PPP) that first introduced direct taxation in 2012 through an act called the Gilgit-Baltistan Council Income Tax (Adaptation) Act of 2012.

The current government of Pakistan Muslim League-Nawaz (PML-N), however, seems inclined to levy more taxes on the people in an attempt to derive maximum benefits out of the investments that are likely to make its way once the China-Pakistan Economic Corridor (CPEC) is functional.

If we have a look at the available statistics, people of G-B pay indirect taxes worth Rs5 billion while about Rs3 billion are levied as income tax. The total revenue being collected from G-B is, however, about Rs10 billion annually, compared to an annual budget of about Rs50 billion which the region receives from the federal government.

But at the same time the two-monthlong strike that now has been postponed after the G-B government issued a notification withdrawing different local taxes, has essentially pushed the government on the back foot. However, the legal experts and general public in G-B are convinced that the region cannot be taxed directly by the government because people of the region are not a provincial part of the country and was only given a ‘provincial status’ by the previous PPP government.

According to the universal principle of ‘no taxation without representation’, the federal government therefore cannot levy direct taxes in the region since they are not represented in the national legislative bodies. Similarly, there are questions with regard to non-utilisation of untapped resources, including forests, hydropower generation, mining, tourism and horticulture. It is believed that if these resources are utilised, not only will G-B be self-reliant but so will the rest of Pakistan.

The regional government, however, tried to justify the tax imposition, citing that the region should not act as parasites on the central government. But instead it should learn to pay taxes so the local government is able to meet its own expenditures in the long run. This argument fails to attract the protesters who began their long march in Baltistan and the rest of the valleys towards Gilgit on December 26^th to press the government to repeal the Income Tax (Adaptation) Act of 2012.

While the decision on amendment of the act is still awaited, there is a deep-rooted suspicion in the region that Islamabad controls G-B directly, through its strong bureaucracy at the centre or, indirectly, through the G-B Council headed by the prime minister himself. The council members lack the required experience and qualification to argue a matter that is highly technical in nature at a meeting chaired by the prime minister. Lawmakers in the G-B Assembly are already complaining of lack of power and authority, when compared to the bureaucracy.

Given the ongoing situation, the regional government is undoubtedly at a crossroads. If it goes against popular wishes, the dwindling federal government may not find comfort for it anymore as its tenure is almost over. But if the regional government surrenders, the opposition parties will take it as their victory which will be hard to deal with for the G-B government in the coming months when the PML-N will be replaced by an interim government at the centre.

However, irrespective of the future of the regional government, we cannot disagree with the logic that taxing a population while denying them representation in the bodies where these taxes are decided is unfair and needs to be paid heed towards.

Published in The Express Tribune, January 1^st, 2018.

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