Pakistan's economy serves these privileged classes. The militro-judicial-civil complex (higher echelons and not the lower staff) represents less than 1 percent of entire population but enjoys unprecedented perks, perquisites and benefits at the expense of taxpayers' money. The mighty landowners exploit labour of landless tillers and unscrupulous industrialists and traders exploit poor urban workers to amass more and more wealth. Additionally, they create artificial hike in prices of essential items to snatch back whatever little is earned by the poor and the fixed-income classes. This reality, prevailing in the Land of Pure, is intentionally ignored in most of the narratives and analyses relating to what actually ails the country - most of the time frivolous blame games, abusing the IMF and the US, Zionist and Indian conspiracies as well as Taliban scepter find place in TV talk shows which are more like reinventing the infamous 'Baghdadi manazaras' [Business Recorder, November 25, 2011].
How our public servants are thriving on taxpayers' money and exploiting foreign funding is aptly elaborated by Nasir Khilji, Senior Economist at US Department of the Treasury, while commenting on an article 'Politics of plots and perks', Business Recorder, July 12, 2013 as under:
"It doesn't end there with these bureaucrats et al. They are even ripping off the American education system and the taxpayer. Let me explain. Most of them when starting out in their careers and along the way got USAID and other agency scholarships to attend elite universities in the States. Some of them just came on contrived tours at the right time before delivery. I met several of them and couldn't stand their elitist views and sense of entitlement. They actually believed that they deserved these scholarships and junkets. While here they had children who automatically became US citizens. Then these guys went back with their families to lord over poor Pakistan and their children went to the finest schools there like Aitchison, Beacon House etc and lived in the public estates you talk about. After high school the US born children applied to the finest universities in the US like Harvard, Columbia, Penn, etc. Generally these universities in co-ordination with the US Department of Education have financial assistance programs that make sure that not so well-off American and resident students who are admitted can afford their exorbitant cost through government and university grants and tuition assistance programs. Now the real fun begins. These children of Pakistani bureaucrats etc fill out financial aid applications and only provide information about their parents' nominal salaries in Rupees and not the full monetized value about the other perks, privileges, and plots their parents have. Without fail they are given free rides in American universities because of the apparently extremely low income households they come from. After graduation they stay here and easily get jobs because they are Americans thus providing a comfortable beach head for their 'poor' parents. Their authentic American peers and their parents are straddled with student loans of as much as $150k after a four-year BA while these scions of the bureaucrats and elites of Pakistan enter the American labour force with at most $20k in loans (well the US Department of Education and universities are generous to poor students but not stooges... they realise that all students after graduation will work and can pay back, therefore they force them to take some loans). Here is another reason for monetizing salaries in the Pakistani government work force. So that they do not spread the lie internationally about the pittance of salaries they receive".
The conduct of our elites is simply shocking. There are cross marriages amongst military and civil bureaucracy and politicians-they 'look after' each other well! For them life revolves around good postings with lucrative benefits and promotions etc. In the last few days, a number of tax officials working under Federal Board of Revenue (FBR) have been requisitioned by federal and provincial ministries as their relatives are now ministers. These are not routine deputations but reflect close political connections! The other day Nawaz Sharif has committed a highly controversial act in relation to the appointment on a high-ranking civilian post of Director General of Military Lands and Cantonments - there is no end to shameless acts on the part of the ruling classes who keep on humming the mantra of democracy.
Take another example, in Finance Bill 2013, presented by Ishaq Finance Minister Dar, on 13th June 2013, not a single tax was levied on the rich and mighty to bridge the fiscal deficit of over nearly Rs 1800 billion. On the contrary, taxes were raised on the poor and the middle-class. At the same time shameless borrowing from banks and elsewhere continues to push the nation in the darker abyss of the 'debt prison'. The elites are happy as their life is not affected by any taxation - rather they are enjoying more benefits and perks, from free plots to free club facilities, all financed by the poor taxpayers.
Dr Ishrat Husain in his book, 'Pakistan: The Economy of an Elitist State', has observed that in sharp contrast to the East Asian model of 'shared growth', based on rapid economic development coupled with a rapid reduction in poverty and more equitable distribution of the benefits of development in Pakistan, the elitist model confers political and economic powers to a small coterie of elite (parasites). While quoting Dr Ishrat's work, Dr Khalil Ahmad of Alternate Solutions Institute, in his book, Pakistan Main Riasti Ashrafia ka Urooj (Rise of State Elitism in Pakistan), published in February 2012, has also concluded that Pakistan is presently owned and exploited by 'state elites' whereas it should belong to all.
Our Riasti Ashrafia (state elites) are engaged in mafia-like operations, for example FBR through the infamous SROs [Statutory Regulator Orders] provides "legal" ways and means to mighty sections of society to amass huge wealth - exemption and concessions given to them were of Rs 1500 billion in the last 5 years alone. It is worth mentioning that even before presenting the Finance Bill 2013, FBR issued many beneficial notifications for the benefit of those in power now, especially for sugar and steel industry. In 2012 when officers of Grade 19-22 were allowed monetized transport allowance, SRO 569(I)/2012 was issued on 26 May 2012 providing that government officials in Grade 20-22 would pay just 5% tax on this allowance. In Finance Act 2013, the flying allowance of PIA pilots has been clubbed with salary, but Ishaq Dar did not provide similar treatment for mighty bureaucrats for their transport allowance. This shows how elites protect each other - professionals like PIA pilots got a raw deal just because they are not part of the 'state elite'!
The problem of Pakistan is not scarcity of resources, but incompetence in exploring and managing them, a lack of effective judiciary and socio-economic injustice. We have made known in these columns that without levying any new tax or raising the rates of the existing ones, the total revenue collection of Pakistan can be Rs 8500 billion (Rs 5000 billion direct taxes and Rs 3500 billion indirect taxes) if existing tax gap is bridged - see details in 'Finance Bill 2013: Apathy of Parliament', Business Recorder, July 5, 2013. This level of collection is possible but as a first step we will have to monetize all the perks and perquisites of judges, generals and civil bureaucrats who must pay tax on fairly-determined 'Consolidated Pay Package' as others are doing. Consolidated Pay Packages for them according to market wages would reduce corruption, remove a strong sense of elitism and improve governance. For politicians and judges, an independent and effective accountability organ is necessary. Without these reforms and 'municipal self-governance' [Business Recorder, July 19, 2013] we cannot hope to achieve rapid growth ensuring job opportunities for millions of young people, whose frustration is on the rise with every passing day as elites are showing apathy towards them and enjoying luxuries at the State's expense. This can push Pakistan to complete chaos and collapse. This is a wake-up call for 'Riasti Ashrafiya' (state elites) lest it is too late.
(The writers, tax lawyers and partners in HUZAIMA & IKRAM (Taxand Pakistan), are Adjunct Professors at Lahore University of Management Sciences)