A question-answer session

Dr Farrukh Saleem

The writer is an Islamabad-based freelance columnist

farrukh15@hotmail.com

Q 1: Who gave us Pakistan?

A: Politicians.

Q 2: Who brought Kashmir back to the world stage?

A: President General Musharraf.

Q 3: Which Pakistani leader has beaten Indians in diplomacy?

A: President General Musharraf.

Q 4: Any immediate rewards for Pakistan?

A: Yes. $700 million from the World Bank; $130 million from the Asian Development Bank and $250 million from Saudi Arabia.

Q 5: Are politicians corrupt?

A: The percentage of corrupt politicians (out of the total) is the same as the percentage of corrupt journalists, bureaucrats, judges, lawyers, scientists, engineers or faujis.

Q 6: Were Benazir Bhutto (BB) and Nawaz Sharif (NS) corrupt?

A: Most Pakistani voters somehow seem convinced that they were both involved in questionable deals.

How about if I answer the question with another question? If BB and NS had not engaged in corrupt practices would Pakistan be any different from what it is today?

BB remained prime minister for a total of 56 months. NS lasted for 64 months in the same post. And Pakistan has been around for 648 months. BB can, at the most, be held responsible for 9% of Pakistan's problems and NS for another 10%. Each of the two may have been behind looses to the treasury amounting to billions of rupees. Considering that our annual GDP is in excess of Rs3 trillion, the losses attributed to those two would amount to less than 1% of the annual GDP.

This surely isn't meant to be a defence for either BB, NS or for politicians as a class. The real need is to locate the root-cause to our pitiable existence. It's just too simplistic to say that we are today what we are because of the corruption of a few individuals. That would amount to avoiding the real issues and thus delaying a resolution of our problems.

Corruption has certainly contributed to our deterioration but to make it out to be 'the cause' would be incorrect.

Q 7: Did democracy fail in Pakistan?

A: Democracy was never even given a chance so there is no question of it failing. Thirteen months of Jinnah, 10 years of chaos, 125 months of Ayub, 33 months of Yahya, 66 months of Zulfikar Bhutto and then 11 years of Ziaul Haq.

Q 8: Did BB and NS fail to deliver?

A: Let us first define "failure" and then "delivery". If failure means not being able to provide what voters want then they both did fail.

What do voters really want? If a survey was done my guess is that voters are going to ask for an educational infrastructure, access to health facilities and opportunities to earn a decent living.

The next question would be whey did BB and NS failed? Well, there is no money for either education or health. If BB and NS have failed to deliver, then, unless, we change the current national defence paradigm every government that follows, whether military or not, is also going to fail.

Q 9: Is additional taxation the solution to our problems?

A: The Government of Pakistan manages to extract 12.9% of the GDP as tax revenue. The same percentage for India, Japan, China, Bangladesh, Iran and Nepal is 10.8%, 11%, 4.9%, 5.7%, 6.7% and 8.9%, respectively. What that means is that our CBR draws out more taxes than do its counterparts in India, Japan, China, Bangladesh, Iran and Nepal (World Development Report 1999/2000). What else does our government want? It cannot, after all, suck blood from stones.

Yes, perhaps millions do evade taxes and that happens everywhere (our government makes that up through heavy indirect taxation). Considering the size of our economy, we are either at or very close to the maximum tax generating potential.

Another related issue is that of constitutional income-tax exemption on the agriculture sector. At 24 percent of GDP, the agriculture sector contributes Rs700 billion. If the agriculture sector is taken out of the picture, then Pakistan's tax revenue as a percentage of GDP stands at over 17 percent. That puts Pakistan ahead of India, Bangladesh, Iran, Nepal, Japan, Argentina, China, Mexico, Indonesia, Turkey, Canada, Thailand, Singapore, Philippines, Kuwait, Uganda, Myanmar, Congo, Columbia, Ghana, Sierra Leone, Madagascar, Guatemala, Mali, Haiti, Cameroon, Burkina Faso, El Salvador, Ethiopia, Ecuador and Burundi.

Q 10: Do only 1% of Pakistanis pay taxes?

A: That's mere government propaganda. Every Pakistani is actually labouring under an awfully heavy burden of taxation. Consider the taxation structure on gasoline and diesel, for instance. When the ex-factory for gasoline is Rs14 a litre the government slaps on GST, Fixed Development Surcharge, Petroleum Development Surcharges and Excise Duty of Rs17 a litre. Everyone uses gasoline in one form or another (even vegetables, fruits and lentils have a transportation component).

If you consume electricity you pay taxes. If you use natural gas you pay taxes. If you use the phone you pay taxes. You smoke you pay taxes. You drink Coke you pay taxes. Go to a movie you pay taxes. Eat vegetables or lentils you pay taxes. If you don't do any of these then you would have to be classified as a non-tax payer.

Q 11: Is there an exceptionally large black economy?

A: The agriculture sector is constitutionally income-tax exempt so there is no need for it to go underground.

That's Rs700 billion worth of white economy. Large-scale manufacturing, finance and insurance and public administration and defence are another Rs1 trillion. Most of that is documented. What we are left with is small-scale manufacturing, transport, wholesale and retail. There is little doubt that there is a black economy component in all of them. How big or how small? Your guess is as good as mine. We have always claimed to be bigger than we really are. We can continue to deceive ourselves for as long as we want to. To be sure, Pakistan's black economy is neither any smaller nor any bigger than most other countries at our stage of development.

Q 12: Are we more corrupt than other nations?

A: Fundamental human characteristics are the same the world over. We all want to be millionaires overnight. Governments almost by definition are corrupt. Be it the American government, the Italian, the Turkish, the Japanese or any other. The smaller the size of a government the lower is the incidence of corruption. Here is a sample of what the Government of Pakistan owns: Wapda, KESC, PIA, Pakistan Railways, Pak Steel, HBL, UBL, NBP, ADBP, NDFC, IDBP, PICIC, ICP, NIT, SSGC, SNGPL, OGDC, National Refinery, Ghee Corporation, PNSC, State Cement, Commodity Credit Corporation, House Building Finance Corporation, Iran-Pak Industries, Pakistan Industrial Development Corporation (PIDC), National Tube well Construction Corporation, PTV, State Life, State Engineering, Karachi Port Trust, National Fertilizer Corporation, Pakistan Automobile Corporation, Pakistan Agriculture Storage and Services Corporation, Pakistan Broadcasting Corporation, Pakistan Insurance Corporation, Small Business Finance Corporation, Utility Stores Corporation (USC), TCP and RECP.

Just because the Government of Pakistan is into each and every aspect of Pakistani life we have corruption into each and every aspect of our lives. The government owns banks, it supplies natural gas, it owns airlines and hotels, it provides telecommunication services and it controls what we eat in terms of wheat or what we wear in terms of cotton. Get the government out of the productive sectors of the economy and corruption shall come down with it. We are no more or less corrupt than any other people on the face of the planet.