Bad old ideas

One can always tell that a plan originated in the mind of a bureaucrat if it seeks to solve a problem by tackling on a few minor symptoms rather than tackling the disease itself. In the case of Prime Minister Nawaz Sharif’s recent announcement of an amnesty scheme for local industrialists who deploy a minimum of Rs10 million in employment-generating capital investments, this phenomenon is visible in all its glory. It seeks to tackle the country’s problem of chronic underinvestment by further exacerbating the problem of tax evasion. We are torn between bemusement and outrage.

How are we so sure that it was not an idea conceived by the Nawaz Administration itself? Because a remarkably similar idea had emerged during the Zardari Administration as well. But while we absolve the prime minister from the shame of having come up with such an idea, we are deeply disappointed that he seems willing to go along with it. This administration has shown itself to be shockingly unwilling to tackle Pakistan’s tax collection problem, which is caused in no small measure due to the problem of our mostly undocumented economy. Far from trying to fix the problem of undocumented transactions, this policy proposal seeks to codify it into law as acceptable.

If the prime minister really wants to encourage job-creating investment activity, he should focus his government’s attention on a few easier proposals that do far less damage. The administration could start by trying to cut back on red tape and improve Pakistan’s standing in the World Bank’s Doing Business rankings. It could ease the process of registering businesses and property, paying taxes, and hiring and firing workers. From that modest start, it could then try to tackle larger problems, like increasing bank lending to private businesses. None of these proposals is a quick fix, but at least they do not seek to stem the bleeding by stopping the heart.

Published in The Express Tribune, December 6^th, 2013.

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