Loud Thinking

Posts Tagged ‘public’

This has reference to the news item of 01 December 2012, by Mehtab Haider titled “Total debt scales Rs.14.5 trillion mark” published by the daily “The News” link :-http://www.thenews.com.pk/Todays-News-3-145837-Total-debt-scales-Rs145-trillion-mark

The gist of the above reveals the extremely precarious economic situation of Pakistan, as below.

1. Pakistan’s public debt and liabilities crossed Rs.13.5 trillion by end-September 2012, as per SBP data released on 30 November, 2012. However, a closer look reading of the data showed that the size of total debt is Rs.14.5 trillion.

2. According to SBP data total debt and liabilities at end of September 2012, touched $66.24 billion.

3. BY THE END OF JUNE 2012, PAKISTAN’S DEBT-TO-GDP RATIO STOOD AT 61.5%.

4. According to the former economic adviser Dr. Ashfaque Hassan Khan. “Even now, interest repayments are consuming 56 percent of the FBR’s revenue. And these unsustainable levels of public debt will be a burden on future generations who will service this debt through exorbitant taxation.”

5. Analysts say that irresponsible fiscal management, sharp depreciation of the Rupee (from Rs.60 to a dollar to Rs.97 to a dollar – in the last four years) and low economic growth have caused the surge in public debt.

In view of the foregoing, it is clearly evident that we have reached a stage, where even alarm bells ringing time has passed. The economy of Pakistan is not sinking, it has already sunk. Foreign exchange reserves are fast depleting.

{This piece was written in December, 2012 and now today (in the year 2013) the government has been forced to obtain loan from IMF to repay its old loan. This proves that we have no money to pay our liabilities. This situation in plain words is called bankruptcy.}

However, what is very alarming and strange that the entire government and the parliament is silent over the issue, as if, they are in collusion with each other, on (God forbid) this virtual economic demise of the country. Otherwise, at least a single person from the entire parliament would have raised his/ her voice, over violation of the binding on the government, for not exceeding the debt-to-GDP ratio over 60%. (Please refer para 3 above).

We should remember that USSR was not dis-membered, due to the violation or collapse of its geographical boundaries. Rather, it was the collapse of its economy, which destroyed a superpower overnight. The USSR broke down without firing of a single bullet, just due to its economic melt down.

If, even at this later stage, patriotic Pakistanis won’t raise their voice, over this virtual economic collapse of the country, then be ready, history will never forgive us, for our collective Harakiri.

No amount of military or nuclear power, can save a nation from its demise, due to the economic collapse. Yes, collective will power of its people, can save a nation from any crisis, but that too if, the people are not too late, as time and tide waits for none.

Although, Pakistan is in a perpetual state of war for more than a decade, yet, the government never acted in a manner, that would reflect even slight realisation on its part, to make its expenses in a more prudent manner. No austerity measures were imposed, to either reduce the size of the bloated cabinet, stop payments of foreign exchange to top government functionaries, who are entitled for such perks, or even restrict purchase of new cars etc.

This is extreme callousness with the nation. On the other side, high and mighty are enjoying benefits, which even a rich country like Switzerland, can not afford to its VIP’s; for example allowing instalment payment of power bills of their factories stretched over a period of 2000 YEARS, YES 2000 YEARS. The Pakistani VIP class is enjoying such facilities and benefits, which even the Queen of England would envy.

Now, business as usual can not be continued.

The economic treason with the state of Pakistan, by all the concerned, looks like a fit case for the patriotic people in the government, opposition (in and out of parliament) and the entire civil society, to demand the immediate formation of a very lean national government, which should impose an economic emergency; and also take necessary action on the question that “why all the concerned remained silent when the debt-to-GDP ratio exceeded 60%, that too, few months back on 30 June, 2012.” Don’t forget, when the same problem was faced by the US government, even the salaries were not paid, till such time, President Barack Obama, got approval from the law makers, for enhancing the expenditures limit.

It will not be out of place to end this note, with quote of the Midwestern tycoon Warren Buffett, who once gave an easy solution to America ’s debt problem on CNBC:

“I could end the deficit in five minutes. You just pass a law that says that anytime there is a deficit of more than three percent of GDP all sitting members of congress are ineligible for reelection.

FRESH TAIL PEICE DATED 17 AUGUST 2013.

THE NATION DEMANDS THAT THE PREVIOUS RULERS BE IMMEDIATELY ARRESTED AND TRIED FOR PUSHING PAKISTAN TO THE STATE OF BANKRUPTCY.

THE NATION ALSO DEMANDS THAT ALL THE ASSETS INSIDE PAKISTAN AND ABROAD OF THE ENTIRE LOT OF THE PREVIOUS GOVERNMENT’S TOP FUNCTIONARIES BE CONFISCATED AND THESE PEOPLE SHOULD ONLY BE ALLOWED TO COME OUT OF THE JAIL IF THEY AGREE TO REPAY THE PREVIOUS IMF LOAN OF $11.3 BILLION.

THE QUESTION IS SIMPLE WHY THE PEOPLE OF PAKISTAN SHOULD REPAY THE ODIOUS IMF LOAN OBTAINED AND UTILISED BY THE PREVIOUS RULES FOR THEIR OWN BENEFITS?

THE NATION ALSO DEMANDS AN IMPARTIAL JUDICIAL INQUIRY INTO THE ECONOMIC MURDER OF THE NATION WHEREIN WHEN GENERAL MUSHARRAF’s GOVERNMENT HANDED POWER TO THE PPP GOVERNMENT OUR LOAN LIABILITY IN THE YEAR 2008 STOOD AT $40 BILLION (PPP GOVT GOT SANCTIONED A LOAN FROM IMF WORTH USD 11.3 BILLION AND RECEIVED $7.6 BILLION SO AT THE END OF PPP GOVT THIS FIGURE SHOULD NOT HAVE GONE UP MORE THAN USD 48 BILLION) AND ONE USD WAS EQUAL TO PKR 60. WHAT HAPPENED TO PAKISTAN’S ECONOMY WHEN THE PMLN GOVERNMENT TOOK OVER IN JUNE 2013 ONE USD WAS SELLING FOR 100 PKR AND NATIONAL LOANS SHOT UP TO USD 67 BILLIONS?

A BILLION DOLLAR QUESTION:

WHAT IS THE SECRET OF UNACCOUNTED FOR INCREASE OF ABOUT 20 BILLION USD IN LOAN LIABILITIES OF PAKISTAN DURING THE FIVE YEARS (2008-13) OF PPP RULE?

How to involve public in increasing tax collection.

Without going into big preamble, I would jot down my suggestions for evolving a national culture of tax payment.

It is most difficult part in any culture to motivate its people to pay tax voluntarily. However, when tax burden, its collection and utilization is made equitable and transparent, majority of people, if not all, would pay their taxes on time and in full.

Although my suggestions would not cover all aspects, yet, when implemented these would definitely prove a major step forward towards establishing a society which pay its tax and feel proud of their contribution.
 
1.       Recognize tax payers and their contribution by:
 
a)      All those who pay personal income tax > Rs. 2.5 million in any one year should be on the list of invitees at President’s  receptions. While all those who pay personal income tax > 1.0 million in any one year should be on the list of invitees at Governor’s receptions.
 
b)      All those who pay personal income tax above Rs. 1.0 million in a year should be honored by nation by allowing them to fly national flag on their motor vehicles and at their residences.
 
c)       Honorary magistrates should be appointed from the list of those who have paid personal income tax above Rs. 0.5 million.
 
d)      Contribution of all personal income tax payers should be recognized by giving them national awards on 23rd March. Suggestions for honor list are:

Personal income tax payment > 5.0 million for 3 years consecutive – Nishan-e Kidmat
Personal income tax payment > 2.5 million for 3 years consecutive – Hilal-e- Kidmat   
Personal income tax payment > 1.0 million for 3 years consecutive – Sitara-e-Kidmat
Personal income tax payment > 0.5 million for 3 years consecutive – Tamgha-e- Kidmat
 
e)      All those citizens paying personal income tax > 1.0 million in any one year should be allowed one free arms license up to a maximum of three licenses.
 
f)       All registered income tax payers should be allowed free registration at NADRA for NIC renewal/reissue.
 
g)      Driving License fee of all registered personal income tax payers should be abolished.
 
h)      All income tax payers should be allowed 25% rebate in car/motorcycle registration at the time of purchase, and 50% rebate for annual registration after they have paid income tax for three consecutive years.
 
i)        All those who have paid personal income tax above Rs. 100,000 should be allowed free of cost new passport or renewal.
 
j)        When appointing members of board of governors of banks/corporate bodies/Government institutions/University Syndicates, these should be selected from the list of citizens who pay personal annual income tax above Rs. 1.0 million.
 
k)      All those Pakistanis sending remittances from abroad should also be recognized for their contributions. Some suggestions are:
 
1)      All those who remit more than $10,000, should be allowed to recommend one of their family member in Pakistan for one free arm license.

2)      All those who remit more than $25,000 should be allowed free passport renewal.

3)      All those who remit $10,000 or more, should be given 2.5% bonus (or Rs.2.50 per dollar) as incentive to use official channels. This incentive should be paid as certificates of investment, cashable after five years. These certificates should carry 10% annual profit and be tradable on stock exchanges.

4)       All those who have remitted $1.0 million or more in a year, should be allowed to hoist national flag on their homes in Pakistan.
 
l)        Peace and Harmony committees should be formulated at police station level. Only income tax payers should be included as private members in these committees.
 
m)    It should be made mandatory for all public office holders and all government employees to get personal income tax registration, even if their total income is less than minimum level. 
 
n)      It should be mandatory for all business accounts to provide national tax number. No bank should be allowed to operate any business account without NTN. All new firms, should be required to provide NTN within 90 days, otherwise their account should be frozen automatically.
 
o)      All bank accounts where credit or debit balance exceeds Rs. 500,000 should automatically (same day) be reported to Income Tax department, unless banks already have NTN in their possession. This includes all type of investments, as well. In case of default, banks/investment institutes  should be heavily penalized.
 
p)      No property (plot/shop/flat/house/farm/agri land etc) should be registered without NTN of buyer.
 
q)      No motor vehicle should be registered without NTN of buyer.
 
r)       Retired persons with no income, continue to file their income tax returns for three years. This should be abolished. Need to file return after retirement should be finished. However, their NTN should be kept alive/valid throughout their life like NIC.
 
2.       Tax collection system should be reformed. Apart from detailed overhauling of FBR, following changes should be announced immediately:

a)      Chairman FBR should be an eminent person without any political affiliation and with experience of business management. He should be selected from private corporate sector. Appointment of Chairman should be for one term three years.

b)      FBR should be given constitutional autonomy in operational matters.

c)       An FBR Supervisory Board should be constituted whose remit should be to quarterly review FBR’s working and submission of quarterly reports to government of its findings and recommendations. This report should simultaneously be published on internet. This board should consist of Finance Secretaries of Pakistan and all provinces, Auditor General of Pakistan, two prominent chartered accountants (non-political) from private sector, Leaders of Opposition in Senate and National Assembly, Chairman Public Accounts Committee.