Selling the strategy

It is by now a tradition to have the federal finance minister attend the annual World Bank-IMF meetings in Washington and brief leaders of other countries, as well as the leadership of international financial institutions, about Pakistan’s economic and fiscal strategy. We do not begrudge Finance Minister Ishaq Dar this necessary component of his job. After all, maintaining Pakistan’s credibility on the global capital markets does require him to serve as a spokesperson for the economy. What bothers us, however, is the fact that the government seems far more interested in having conversations with foreign donors about their economic strategy than with domestic taxpayers.

Pakistan’s low tax-to-GDP ratio is no accident: there is a pervasive view among the population, including among the most educated citizens, that paying taxes is not worth it in terms of the services received in return. We would say that the government has a domestic credibility problem, but that would assume that the government has even made an attempt to convince the citizenry that paying taxes will yield essential services. The government also makes hardly any effort to explain what its vision of the economy is and what policies it plans on enacting in order to get the nation there. Indeed, far from it, the budget documents put out by the government every year seem designed to hide as much relevant information as possible.

The only way Pakistanis ever learn about the country’s economic managers’ vision (or lack thereof) is through the coverage of their negotiations with international lenders. The question we would like to pose to the Nawaz Administration is the following: why does the government spend so little time trying to convince taxpayers that the money they pay will be well spent? What would happen if the energy spent on presenting a positive face of economic progress in Pakistan were spent on convincing taxpayers that the government was serious about providing them value for their money? And what if that conversation was accompanied by an effort to crack down on the massive corruption within the Federal Board of Revenue?

The sad fact remains that while Pakistan has made the political transition towards democracy, the economic compact that would solidify democracy has yet to take hold. Parliamentary democracy was born in England when the population decided that they wanted a say in how much their government could tax them and what it would spend that tax money on. The rallying cry of the American Revolution was ‘no taxation without representation’. In Pakistan, we appear to be happy with representation without taxation, apparently unwilling to recognise that such a situation is doomed to collapse.

The origins of Pakistan’s financial dysfunction lie in the very earliest days of the republic, when the country’s founders chose to beg Washington for aid rather than establishing the early norms that would have allowed them to create a culture of collecting taxes and being accountable to citizens. The failure to establish that taxpayer-voter relationship is what created the space for dictatorship to take hold in the country.

The time has come to begin expecting ourselves to pay our own bills. We applaud the effort by the government to try to secure funding for the much-needed Karachi Circular Railway project. But while we are grateful to the Japanese government for its generosity, would it not have been better to have a functioning elected city government in Karachi that would be able to raise the funds for such a project by levying a tax on the residents of the richest city in the country?

The future of this country will not take a turn for the better until we abandon the malaise that comes from low expectations of ourselves. We cannot keep on complaining about our leaders caring more about what Washington thinks if we are not willing to contribute more for the running of our government than the United States does. That is the only way to attain true independence.

Published in The Express Tribune, October 15^th, 2013.

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