Get Pravin Gordhan!

Not many Pakistanis, if any, would have heard of Pravin Jamnadas Gordhan. He is the highly respected finance minister of South Africa since 2009 and was previously a most effective commissioner of the South African Revenue Service (SARS) (1999-2009).

Some recent news items in our media reminded me of Gordhan and South Africa where I spent three years. These news items relate to the massive evasion of taxes by our so-called elite, business and professional communities. It is said that in a nation of 180 million people, registered tax payers are only 1.91 million, of which the salaried persons are 1.05 million! This is not only shocking but also disgraceful. The tax-to-GDP ratio is barely 10 per cent, which is one of the lowest in the developing world.

Recently, auditors unearthed income tax evasion of Rs13.5 billion in 364 cases involving some big names. Such massive evasion is just not possible without the connivance of the Federal Board of Revenue (FBR). In a shocking disclosure of the FBR’s inefficiency and corruption, it was reported that, in financial year 2008-09, the number of actual return filers decreased to 677,442 from 772,992, a decrease of 12.4 per cent. The total tax evaded in the period stood at Rs796 billion. The World Bank, IMF, ADB and the international donor community have been repeatedly asking us to overhaul our revenue collection system and broaden our miniscule tax base.

And this brings me to Pravin Gordhan and South Africa from whom we can learn a great deal on how to increase and manage our revenue collection. Pravin, who was appointed commissioner of SARS in 1999, is credited with bringing about a radical transformation in revenue collection and compliance with tax law, which increased South Africa’s revenues manifold and allowed for a surplus budget year after year. Pravin is known to be a man of very high integrity who does not compromise on his principles, does not bend before political expediencies and never flinches before crooks. These are some of the basic qualities the chairman of our Federal Board of Revenue must possess before we can hope to see any improvement.

Recently, US Secretary of State Hillary Clinton warned that Pakistan must make the rich pay up by broadening its minuscule tax base in order to address the issue of nationwide reconstruction in the aftermath of the devastating floods. Wealthy landowners who comprise the country’s political elite typically pay little or no taxes. According to one estimate, Pakistan needs around $25 to $45 billion over several years to get to a self-sustaining economic level.

Why do we need foreigners telling us what is good for us? Don’t we have any dignity and self-respect? A nation that never tires of vociferous claims to sovereignty and independence, and being the only Muslim nuclear power, yet has the begging bowl permanently on display, ought to be ashamed of itself. Hollow claims to greatness will only keep us in a perpetual state of self-deception and not take us anywhere worthwhile. No nation or society develops without regular periods of serious self-introspection, a characteristic sorely lacking in us.

We need to urgently broaden our tax base, crackdown on widespread and endemic corruption in the FBR and not succumb to cheap political expediencies. Without sorting out our revenue collection system we can never achieve our dream of a stable and prosperous Pakistan. We can learn a great deal from the experience of South Africa in this regard and I urge the government to establish contact with its counterpart in Pretoria on priority. Get Pravin Gordhan to advise us! Better still, try to enlist a Pakistani Pravin Gordhan.

Published in The Express Tribune, October 29^th, 2010.