THE IMF is reported to have accepted a request from Pakistan to delay some “significant sales tax and income tax reforms” for six months in view of resurging Covid-19 infections. These reforms are part of the $6bn loan deal reached last year to help shore up the country’s deteriorating balance-of-payments situation. The IMF is understood to have allowed the reprieve during technical-level talks on delaying tax measures in the sales tax act and on changes in personal-income tax slabs. Talks between Islamabad and the Fund on proposed changes in the corporate income tax regime, mostly related to the withdrawal of exemptions, will begin next month. It is likely that the IMF will approve the request on the same grounds and delay the execution of its proposals until the next financial year. More details in the coming weeks will reveal the grounds on which Pakistan has approached the IMF for postponing the much-needed tax reforms. However, it is clear that both the finance ministry and FBR feel it isn’t desirable or feasible to implement reforms at a time when the economy is already struggling to recover from the impact of Covid-19 cases that are increasing. But it is still uncertain whether the lender will agree to the downward revision of the revenue collection target of Rs4.9tr this fiscal or postpone additional measures for the latter half of the year.
For the last many decades, Pakistan has been trying unsuccessfully to fix its tax system, which is at the heart of the widening budget deficit and growing debt burden, to raise its tax-to-GDP ratio by broadening the narrow base, and reform administration and restructure the FBR. Many past attempts have failed because of two reasons: One, the wealthy classes, retailers, large growers, etc do not want to come under the tax net for selfish reasons. Two, the FBR machinery is inefficient and corrupt, and has little interest in netting the untaxed and under-taxed sectors. There is as much resistance to the reform efforts from within the FBR as outside it. The recent attempts by the incumbent government to implement reforms have fallen apart and we have seen Mr Shabbar Zaidi, who was brought from the private sector to fix the system, quit his job.
In the same vein, we have seen strong opposition from senior FBR officials to the soft interventions suggested by Dr Ishrat Hussain to improve the working of the board. The argument by the top FBR hierarchy that they could reform the taxation system — administration and policy — does not hold ground. How can those who are the target of the reform effort and have deep stakes in the status quo be trusted with this task? The IMF may have agreed to provide relief for now but time and renewed pressure from the lender will catch up with the FBR soon.
Karachi census debate
WHILE the federal cabinet may have approved 2017’s national census, the move has resulted in a fresh controversy, as parties with a power base in Karachi protest over the apparent undercounting of the city’s population. Strong criticism has also been levelled at the MQM-P, with opponents of the party calling upon the Muttahida to quit the ruling coalition if it disagrees with the census numbers. The MQM had only written a dissenting note against the cabinet’s endorsement of the census figures. Strangely, the MQM-P has said it will take to the streets to protest the census results, while adding that it will consult “the people” on whether or not to quit the ruling coalition. Meanwhile, the Muttahida’s opponents — particularly the PSP — have been roasting the party for its apparent flip-flops.
While flawed census results have an impact on the division of resources nationwide, undercounting in Karachi is a particularly sensitive issue, considering the step-motherly treatment the metropolis receives from both the federal and Sindh governments. With the infrastructure in a shambles, no civilised public transport system to speak of and not enough water to meet the needs of its large population, incorrect figures will indeed add to Karachi’s already numerous woes. The MQM-P has pointed out that it is strange that 25m CNICs have been issued from Karachi, though the Sindh capital’s official population is only 16m. The federal government must take these concerns seriously as such flawed data cannot be used as a base for future planning. While the mechanics of the census need to be fixed in the long term, perhaps an audit of 5pc of the 2017 census blocks — as demanded by the PPP — could help alleviate concerns around the exercise. The fact is that an exercise as crucial as the census should be transparent and free of accusations of regional or ethnic bias. The population numbers have far-reaching results, and any fuzzy maths is bound to result in cries of foul play. Along with allocations for the NFC Award, the delimitation of constituencies as well as seats in parliament are all dependent on population figures, so accusations of an improper count cannot be simply brushed aside. Instead of playing politics, all parties, especially those in the ruling coalition at the centre, must come up with a consensus over how to move forward on the issue so that misgivings about the census can be allayed.
Trump’s pardoning spree
“THEY aren’t coming to this country, if I am elected” was one of the pledges Donald Trump made on his campaign trail and that, unlike many others of his obnoxious promises — such as the Mexican wall — the American president dutifully implemented. No wonder, banning the entry into the US of people from seven (reduced to six later on) Muslim countries was one of the earliest decisions he made as president.
Recently, in keeping with his parochial bent of mind that he has made no attempt to disguise, the president extended executive clemency to four Blackwater security guards convicted for the cold-blooded murder of 14 (17 according to the Iraqi version) civilians in Baghdad in 2007 — an act condemned not just by the Iraqi people but by many Americans too, including Congressmen. “Our blood is cheaper than water”, said a Baghdad student, while retired US general, Mark Hertling, called the pardon “egregious and disgusting”, and added an apt rebuke: “Shame on you, Mr President!”
For pardoning those responsible for the crime at Baghdad’s Nisour Square, Mr Trump had two insular motives: first, the victims must be largely Muslim; second, Blackwater was headed by one of his close supporters. This partisan streak runs through the 15 people he extended clemency to in his misguided Christmas Eve generosity. Among the convicted felons he saved from the consequences of their crime are lawmakers and those who admitted lying to federal investigators during the probe into the alleged Russian meddling in the 2016 campaign. The three Congressmen pardoned by Mr Trump were termed as “most corrupt” by a rights watchdog.
Mr Trump’s attitude towards Muslims and his Latin American neighbours smacked of religious prejudice and unconscionable racism, while his xenophobic outbursts sometimes shocked his country’s allies in Europe, thus eroding the moral basis of America’s claim to world leadership. The Trump era will finally end on Jan 20, leaving the Democratic administration with the stupendous but thankless job of rehabilitating America’s image as an upholder of liberal, democratic values.