Tag Archives: revenues

Pakistan’s economy Plugging leaks, poking holes – Who will pay for Pakistan’s state?

PAKISTAN’S national poet, Muhammad Iqbal, believed the subcontinent’s Muslims needed to unite if they were to prosper. Without a strong sense of nationhood, he wrote, “mountains become straw and are blown away in the wind”.

Poetry and taxes do not often mix. But those melancholy lines grace an analysis of Pakistan’s fiscal plight by Ehtisham Ahmad of the London School of Economics. The country’s tax revenues have collapsed. Its debt is almost certainly unsustainable without outside help. And yet Pakistan does not pull together. “Textile lobbies, the urban gentry, traders and agriculturists, all point to the other and say: Tax that group first, but do not tax me,” Mr Ahmad writes.

The tax authorities can identify a mere 768,000 individuals who paid income tax last year. Even fewer—just 270,000—have paid something in each of the past three years. That is one reason why Pakistan’s tax revenues amounted to only 9.1% of GDP in the latest fiscal year, one of the lowest ratios in the world (see chart). These are exceedingly narrow shoulders on which to rest a nuclear-armed state of 180m people. The culture of cheating starts at the top. Most members of parliament, many of them conspicuously affluent, do not file tax returns.

In the months before an election, due by May, the government of President Asif Zardari of the Pakistan Peoples Party (PPP) is proposing a controversial remedy: an amnesty for evaders. They will be invited to wipe the slate clean with a one-off payment of only 40,000 rupees ($400). The government says it is a quick way to resuscitate the public finances and expand the tax net. Its critics see the amnesty as a boon for politically connected crooks.

Continue reading Pakistan’s economy Plugging leaks, poking holes – Who will pay for Pakistan’s state?

Preying on Poverty: How Government and Corporations Use the Poor as Piggy Banks

by Barbara Ehrenreich
Individually the poor are not too tempting to thieves, for obvious reasons. Mug a banker and you might score a wallet containing a month’s rent. Mug a janitor and you will be lucky to get away with bus fare to flee the crime scene. But as Business Week helpfully pointed out in 2007, the poor in aggregate provide a juicy target for anyone depraved enough to make a business of stealing from them.

The trick is to rob them in ways that are systematic, impersonal, and almost impossible to trace to individual perpetrators. Employers, for example, can simply program their computers to shave a few dollars off each paycheck, or they can require workers to show up 30 minutes or more before the time clock starts ticking.

Lenders, including major credit companies as well as payday lenders, have taken over the traditional role of the street-corner loan shark, charging the poor insanely high rates of interest. When supplemented with late fees (themselves subject to interest), the resulting effective interest rate can be as high as 600% a year, which is perfectly legal in many states.

It’s not just the private sector that’s preying on the poor. Local governments are discovering that they can partially make up for declining tax revenues through fines, fees, and other costs imposed on indigent defendants, often for crimes no more dastardly than driving with a suspended license. And if that seems like an inefficient way to make money, given the high cost of locking people up, a growing number of jurisdictions have taken to charging defendants for their court costs and even the price of occupying a jail cell. ….

Read more » Common Dreams

Pakistan’s National Finance Commission (NFC) Awards – A tool to exploit Sindh

By Naseer Memon (English Translation by: Khalid Hashmani)

[Backdrop: As the Pakistani establishment including their new political party partners mull over the upcoming NFC award, the people of Sindh have dug their heals and want that the awards be fair and follow the best practices of other similar countries such as India. The grass-root political workers from all political parties in Sindh who have long criticized the inequalities of NFC award are joining hands to bring an end to the exploiting aspects of the award. In this backdrop, SaeeN Naseer Memon has once again written a timely and detailed analysis of the exploiting nature of current NFC awards. He urges the ruling party that as the inequities in the form of NFC started after 1973 constitution when PPP was in power; the time has come for PPP to play its role in correcting this historic form of exploitation and restore fairness to all provinces. It is hoped that the information in this article would enable those who are engaged in lobbying and advocacy activities on behalf of Sindh to get it in front of decision makers and influencers. ]

Basic inequities of Current NFC Awards

The critical inequities of the NFC award lie in three areas – first it is distributed solely on the basis of population, second it covers almost all of the revenue generation in Pakistan, and third it enables the federal government to keep a lion’s share for itself.

How Pakistan and other countries collect and distribute revenues to Provinces?

In 1974, 1979, and 1990 NFC awards, provinces received 80% of total revenue collected and 20% was kept by the federal government. However, starting 1996 during the rule of an interim government headed by PPP’s Miraj Malik and when the Chief Minister was Mumtaz Bhutto, the federal share was drastically increased to 62.5% leaving only 37.5% for the provinces.

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