While over 42% of the country’s population lives below poverty line or is deprived of basic facilities, the ever-increasing perks and privileges of top bureaucracy and the lavish lifestyle of the State minions consume billions of tax-payers’ money. In addition, the tax payers will have to bear Rs.2 billion for foreign jaunts of the head of the state and the head of the government alone. Though President is a figurehead with no constitutional role in the day-today running of the government, he is allowed to have a huge secretariat and a large number of government officials, who would cost the exchequer more than Rs.482 million in terms of their salaries alone in the fiscal year2011-12.
At a time when the country’s economy is in tatters, and at 2.4% it witnessed the lowest growth rate during the last 25 years, it is disappointing to note that there has been no mention of austerity and cut in government administration, or measures to motivate all segments of the society (including exemption enjoying commercial enterprises owned and run by the powerful establishment) to pay taxes. Is it not time that long existing exemption enjoying commercial enterprises be now brought to the tax net?
While our leaders drive in classy, bullet proof cars, Mahmoud Ahmadinejad, the simple and austere Iranian president, is well-known for driving a 33-year old Peugeot 504 till recently. Ahmadinejad has now auctioned his car for $1 million with the intention of utilising the sale proceeds for building 60,000 homes for the disabled and needy women. Will our legislators follow suit? Or, is it asking too much! In total contrast to Pakistan where men in politics are fabulously rich, the sitting 76-year old Uruguayan President Jose Mujica’s entire wealth is not more than a 1987 Volkswagen Beetle.
According to Britain’s ‘Daily Telegraph’ (June 5, 2010), President Mujica doesn’t have a bank account or other assets and doesn’t reside in presidential palace. He donates a major chunk of his monthly salary for charitable purposes. He has refused to move to the official presidential residence, opting to stay in the simple home his senator wife owns on the outskirts of the capital, Montevideo. A former guerrilla fighter in the early 1960s, Mujica was Uruguayan Minister of Livestock, Agriculture and Fisheries from 2005 to 2008 and a Senator afterwards, before assuming charge as head of state in March 2010. In Pakistan’s case, hemorrhage-stricken public sector enterprises continue to bleed despite tall claims by the authorities, last year, to restructure these loss-making institutions.
Milton Friedman’s saying “If you put the federal government in charge of the Sahara Desert, in five years there'd be a shortage of sand” perfectly fits Pakistan where the government is in every sector, and as a direct market participant/competitor, it is obstructing the private sector’s entry into the market place, and, thus, arresting growth of both revenues and the economy.
According to the findings of the Pakistan’s Planning Commission (PC), the footprint of the government has been estimated to be as large as over 50% of the national income, making it very difficult for the private sector to expand. Poor governance and dysfunctional markets figure high among the most important reasons why growth in Pakistan could not achieve a sustained acceleration, admits PC in its May 2011 publication “Pakistan: Framework for Economic Growth.” With no reasonable fiscal space in sight, the government has again felt compelled to allocate Rs.166 billion as subsidies, out of which a major chunk of Rs.122.7 billion has been earmarked as subsidy for the power sector. Therefore, the earlier the government entrusts the management of public sector enterprises to the private sector the better it would be for the national economy.
Remember, in the past, the government also used to pump money, every year, into taken-over banks, but after privatization, the banks have become robust dividend paying entities. Likewise, after privatization, the public sector enterprises may start yielding profit and paying handsome amounts in taxes to the government, which would not only rid the nation of the menace of subsidies but would also bolster its revenues in the shape of taxes.