A turnaround is possible
The writer is an Occupational Health & Safety professional also engaged in writing and advocacy on social issues. He can be reached at naeemsadiq@gmail.com and tweets @saynotoweapons
To run out of dollars is bad. To run out of ideas, imagination and enthusiasm is worse. To run out of capacity to change and learn is suicidal. Pakistan is concurrently faced with all three maladies. It simply refuses to learn anything from anyone. It failed to figure out what made India receive an FDI of $85 billion in 2022 as compared to $1.5 billion received by Pakistan. It failed to learn from Bangladesh on how it reduced its Total Fertility Rate to 1.9 while Pakistan stayed frozen at 3.6. It failed to learn from Taiwan, Korea or Singapore on how to build technology based industries.
Pakistan too can make a turnaround. But this would call for undertaking painfully drastic reforms. Pakistan’s greatest challenge lies in seeking alternates to our existing stock of clueless, corrupt and power-hungry politicians, who are themselves the biggest roadblocks in the process of change.
No turnaround is possible without implementing ruthless economic measures — withdrawing all benefits, perks, privileges, entitlement, the 200,000 official vehicles, TV sets, free fuel, security guards and allowances of all serving and retired government officials and politicians. Every official should simply receive a flat salary without any of the dozen or so allowances that inflate their salaries manifolds. Forty per cent of all government ministries and 80% of all Commissions should be dismantled. The appointment of 90 ministers and allocation of discretionary fund of Rs90 billion to MNAs are de facto bribes and must be done away with.
Pakistan’s Rs800 billion pension budget is insane and unsustainable. A new pension scheme be instituted where each employee contributes 10% of the salary every month while a matching contribution is made by the employer. The highest government pension paid to any individual ought to be capped at Rs150,000. Pensions should be made taxable and not extended to the second generation. Eliminate ghost pensions, multiple pensions and payment of pensions in foreign exchange to pensioners living abroad.
The concept of ‘non-filers’ must come to an end. All bank accounts, electricity bills, air travel, telephone SIMs, BISP handouts, transactions beyond Rs30,000, car registration, purchase or sale of property, etc must be subject to filing of taxes. FBR should design a simple half-page tax return in Urdu that everybody should be able to fill by himself.
According to World Bank, Pakistan is exploiting only half of its tax potential, leaving almost two-thirds of GST liabilities and more than half of income tax uncollected. Pakistan ought to apply and enhance progressive taxes on retail, agriculture, real estate, pensions, wealth, inheritance, and capital gains. Every sale/purchase of property ought to be taxed at a minimum of 5% of its current market value. Introduction of ‘deemed income tax’ based on the actual market value of unused property could easily generate Rs100 billion per year.
Pakistan’s turnaround cannot happen without promoting modern governance, digital technology, innovation, import substitution, new business ideas and startups. Eighty per cent Pakistanis have almost no purchasing capacity beyond their immediate needs of food and shelter. Thus an adequate Universal Basic Income for every citizen is vital to the development of indigenous industry. Import substitution of products like coal, palm oil, tea, consumable goods, household electronics and Hot Rolled Steel Coils could save up to $10 billion per year and also boost the indigenous industry.
Pakistan ought to open its mind and frontiers to new ideas, people and technology. It could shed its pariah status by ruthlessly curbing religious fanaticism. Pakistan must shed appeasement of its orthodox clergy and pampering of its rotten elite. It must also shed loss-making state entities. Many of the hugely bureaucratic and over-staffed government departments are ideal candidates for application of the tribal wisdom of Dakota Indians — “when you discover that you are riding a dead horse, the best strategy is to dismount.”
Published in The Express Tribune, July 8th, 2023.
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