Death and taxes

The rich cannot continue to shop whilst the Pakistani people drop into further poverty. Death and taxes for all.

In the past week Nato forces, directed by the Pentagon, have repeatedly committed what are technically “acts of war”. Flagrant breaches of Pakistan’s borders by US and Nato helicopter gunships recently killed three Frontier Corps soldiers, who were manning a security checkpost in Kurram Agency. In the past 10 days, Nato forces have killed over 35 Pakistanis in missile attacks conducted well into Pakistani territory. Our government and even key politicians have been unusually tepid in their reactions to these aggressive US acts. The statements issued are not even strong enough to be termed condemnations — at best they amount to objections to what is a flagrant violation of international law and UN resolutions governing Isaf operations in Afghanistan.

The attacks are also a display of contemptuous disregard for the Pakistan army and government. The deaths of Pakistani soldiers, in particular, has left the government with no choice but to halt the supply convoys which traverse Pakistan to keep Nato forces alive in Afghanistan. As one analyst put it —“how can the US expect Pakistan to transport the very fuel and munitions that are then openly used to attack and kill Pakistani civilians and soldiers?” The government needs to stand firm in its decision to halt the supply convoys as the US attacks are a warning of things to come. Part of the US security establishment has dangerous ambitions to expand the war from Afghanistan into Pakistan, particularly Balochistan.

While US missiles made death a certainty for 35 Pakistanis in this week, US Secretary of State Hillary Clinton wishes to make taxes a future certainty for our ‘elite’. Clinton finally said something that ordinary Pakistanis welcome, when she stated that Pakistan must tax its ‘elite’, as US taxpayers cannot be expected to fund post-flood rebuilding, when Pakistan’s “landowners and all the other elite pay nothing or pay so little (tax) that it’s laughable”. Even though the comment was aimed at her domestic audience, Mrs Clinton’s demand that the tax system in Pakistan be re-hauled to encompass the wealthy will resonate here. It is indefensible, outrageous and unjust that the powerful who burden us with more taxes, pay virtually none themselves, despite their obvious affluence.

Mrs Clinton also hinted that countries such as Pakistan, that do not tax their wealthy elite, may well find future US aid curtailed as a result. Now that should strike the fear of the Almighty into the Rolex wearing, Gucci touting, Armani clad “servants of the people”. IMF loans are already linked to tax reform but if international aid also becomes conditional, then the pressure on these elite will be substantial. And if Mrs Clinton really wants Pakistan’s elite to cough up, then the US and other western countries, whose banks and prime real estate serve as safe havens for the corrupt, will have to be as strict about tracking the proceeds of corruption and tax evasion as they are about proceeds from drug trafficking, organised crime and terrorism. Many developing countries have tried unsuccessfully in the past to recoup stolen monies from foreign countries. However, there has been a lack of will to disrupt a lucrative source of deposits for Western banks. International legislation requiring banks to verify that deposits are backed by proof of income and tax paid needs to be enacted forthwith.

Meanwhile in Pakistan, civil society and the educated middle class must agitate against unfair taxation. The Supreme Court would do well to ensure that new tax legislation encompasses the wealthy. Any new taxes sporting devious names, which further burden the salaried class rather than expanding the tax base, must be blocked. Allowing certain groups exemption from income tax, except the very poor, is illegitimate, unjust and discriminatory. Agricultural incomes must be taxed, as should windfall profits. Public office holders must be required to declare loan write-offs, real estate holdings and foreign assets.

Unjust taxation has been the downfall of governments and empires, triggered revolution and rebellion. So consider this a final warning. Tax the wealthy elite now. Institute and enforce a fair tax regime. The super rich cannot continue to shop whilst the Pakistani people drop... into further poverty. Death and taxes for all.

Published in The Express Tribune, October 2^nd, 2010.