Dawn Editorial 11th May 2024

Taxing pensions

DESPITE the state of the economy, the IMF’s demand that the cash-strapped Shehbaz Sharif administration start taxing civil and military pensions exceeding Rs1.2m a year, as well as revoke income tax exemptions for various pension schemes and funds in the next budget, appears unfair.

It is true that the pension tax and withdrawal of existing income tax exemptions for pension funds and schemes is projected to generate additional tax revenues in the range of Rs22bn to Rs25bn per annum, but the move will add to the financial burdens of a class of citizens with few other sources of income. Besides, withdrawing the tax rebate incentive from pension funds will discourage people from saving for their retirement.

The proposal is reported to be part of the recommendations that the Fund has already put forth for the government to recover additional tax revenues of Rs600bn. It is premised on the principle of a fair tax policy: all incomes must be taxed regardless of source.

Unfortunately, Pakistan’s taxation structure is inequitable and unfair. If the government has no option but to tax pensions, then it has to ensure that the fair tax principle is implemented across the board and that ‘special exemptions’ being enjoyed by judges, military personnel and others are stopped. Moreover, the tax must be applied progressively. The suggested threshold of Rs1.2m for taxable pension incomes would create a distortion in the existing income tax scheme, where all personal incomes above Rs600,000 per annum are liable to pay income tax. This anomaly can be removed by doubling the threshold of taxable income for all individuals to bring it at par with the one proposed for pensioners. That would mitigate the burden on the inflation-stricken classes.

Tax reforms must go beyond milking the salaried classes and pensioners, who are easy FBR targets. In spite of multiple tax reform programmes implemented over the last three decades with financial assistance from multilateral lenders, the authorities have failed to achieve their objectives, including raising the tax-to-GDP ratio and bringing it closer to the level of lower-middle-income countries at 15pc to 20pc. The previous 39-month IMF programme had also envisaged boosting tax revenues by 4-5pc of GDP by reforming personal and corporate income taxes.

Yet Pakistan’s tax collection as a ratio of GDP remains below 10pc. Tax reforms have failed to deliver because of distortions created by the FBR bureaucracy through SROs, apparently for personal gains. With the size of tax expenditure at Rs2.5tr at the end of FY23, it is clear that some people are being forced to pay more tax than what they should be in an equitable tax system, while favoured circles enjoy exemptions.

Unless these distortions are removed by implementing fair taxation measures, it will be difficult to increase the tax-to-GDP ratio. Last but not least, the power to levy a tax or allow exemptions should be restored to parliament by eliminating the SRO culture in FBR.

Published in Dawn, May 11th, 2024


Orwellian slide

IN recent years, Pakistan has made several attempts at introducing an overarching mechanism through which to check the strident criticism of the state, its institutions, and their policies, on social media. However, the authorities have repeatedly had to fall back on various extra-legal means to keep the ‘problem’ in check, largely because legislative measures have proven insufficient and because major platform operators remain unwilling to engage with our authorities’ concerns and refuse to entertain their requests for more access to platform users’ information. Meanwhile, social media users seem to have grown increasingly emboldened while directing their opprobrium at the state, protected by the anonymity offered by most platforms. Lately, they have been directing unprecedented vitriol at institutions that were once considered untouchable. Understandably, this has been quite upsetting for those in charge, who seem to be panicking at their inability to control social media as easily as they can the mainstream media operating in the country.

This seems to be the long and short of why the government has introduced two new authorities in recent days: the National Cyber Crimes Investigation Agency, to replace the FIA’s Cybercrimes Wing, and the Digital Rights Protection Authority, which is awaiting the cabinet’s assent. The DRPA, whose name seems to follow the nomenclature for government ministries in George Orwell’s 1984, will, by one account, “create a secure and trustworthy digital environment while promoting user protection online and safeguarding fundamental rights”. However, those on the ground believe that this state-defined reasoning for DRPA’s creation is little more than a fig leaf. They say that the authorities have long wanted a watchdog that can freely hound critics who get too bold online; they refer to the around two dozen cases registered against journalists since the Peca laws came into effect to justify their apprehensions. To be fair, the context in which these changes are being introduced and the speed at which things seem to be moving do not really allow for a more charitable interpretation of the government’s intentions. Just a day after the DRPA received the prime minister’s approval, the military authorities issued stern words on what was described as “digital terrorism” unleashed by “inimical forces” trying to lure citizens away from the nation’s armed forces. Sounds like an ill omen for the freedoms Pakistani citizens have grown used to in the digital age.

Published in Dawn, May 11th, 2024


Terror against girls

ONCE again, the ogre of terrorism is seeking the sacrifice of schoolgirls. On Wednesday, just days after the announcement of a four-year education emergency in the country by the prime minister, unidentified militants blew up a private girls’ school in Shewa tehsil of North Waziristan district; the school administration had received multiple threats prior to the attack. Last May, two government girls’ schools in Mir Ali were obliterated in a midnight assault. In 2018, the year the KP-Fata merger was signed into law, bomb explosions razed two schools for girls and pamphlets warning residents against sending older girls to schools in various tribal areas were widely circulated. Before Operation Zarb-i-Azb began in 2014 in what was then the North Waziristan Agency, educational institutions in KP and former Fata suffered frequent bomb attacks by militants. According to a report, about 1,500 schools stood decimated over a span of a decade, with enrolment, in many places, virtually grinding to a halt. The message is clear. And as the past is not another country, it cannot go unheeded.

It is obvious that targeting avenues for female empowerment is rooted in the regressive propensities of militant groups, especially the TTP, whose latest action is not only a reflection of its own past but also mirrors the hard-line approach taken by the Afghan Taliban, who have clamped down on girls’ education in their country. Hence, it is incumbent upon the Pakistani state to intensify pressure on Afghanistan’s rulers to abandon their anti-women policies and immobilise their ideological brothers. It is a concern that should worry all countries in the region. The tribal belt, ravaged by terrorism, poverty and fear, is crying out for the implementation of an upgraded, comprehensive security policy, including training and resources for counterterrorism units so that effective kinetic responses can dismantle terror networks. However, our security apparatus must understand that the battle against a mindset is harder.

Published in Dawn, May 11th, 2024

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