Saturday, August 31, 2013

Friday, August 30, 2013

Yeh Hawaon Kay Musafir, Yeh Samandron Kay Rahee

Please note: This post has been shifted to the Urdu Blog - Civil Pakistan. To see it, click the link below:

Aaj Ka Akhbaar Aur Pakistan Ki Halat-e-Zaar

Please note: This post has been shifted to the Urdu Blog - Civil Pakistan. To see it, click the link below:

Riyasati Ashrafiya (State Aristocracy) grabs loans and distorts the economy

'Qarz burhao, mulk bigarho'
By Huzaima Bukhari and Dr Ikramul Haq  

[This article first appeared in the Business Recorder of August 30, 2013.]

In 1997 the slogan of Pakistan Muslim League (Nawaz) was 'Qarz Utaro, Mulk Sanwaro' [retire debt, adorn country], which is reversed in 2013 as all efforts are underway to increase public debt - both domestic and external. The new slogan appears to be 'Qarz Burhao, Mulk Bigarho' [increase debt, damage country].

People of Pakistan have yet not forgotten the fate of 'Qarz Utaro, Mulk Sanwaro' Scheme announced by Nawaz Sharif on February 23, 1997 along with declaring Friday as weekly holiday instead of Sunday within one week of assuming his second term as Prime Minister [February 17, 1997 to October 12, 1999]. The Government of Pakistan Muslim League (Nawaz) [PML-N] in its third term is using the same old tactics-misleading the people on economic issues.

Finance Minister Ishaq Dar on August 26, 2013, in a Press conference, revealed that the "government will seek $12 billion in loans from international financial institutions to retire its previous debts and to try its luck with international and domestic bond markets to finance its mega projects." The worthy minister must be aware of the fundamental principle that in the absence of creditworthiness "no country can try its luck with international and domestic bonds" and that too just to finance some "mega projects", the viability of which is highly questionable. Who will buy bonds of a near-bankrupt State and even if investors do take risks will it not tantamount to further indebtedness - costly and burdensome? Nawaz Sharif as usual is unwilling to tax the rich and mighty that can bridge the enormous tax gap. If we plug all loopholes it is not difficult at all to raise taxes of Rs 8 trillion - the actual tax potential of Pakistan ['No will to tax the rich', Business Recorder, June 14, 2013].

Before proceeding further to analyse the strategy announced by Dar about debt retirement through issuance of bonds, the following facts about 'National Debt Retirement Programme' [NDRP] initiated on February 27, 1997 under the slogan 'Qarz Utaro, Mulk Sanwaro' are worth considering:

1. NDRP solicited funds from non-resident Pakistanis (NRPs) towards retiring the country's external debt. Resident Pakistanis were also allowed to participate in the scheme using their foreign currency accounts, FEBCs, FCBCs, traveler cheques, remittance from abroad or by surrendering hard currency. Deposits in three currencies (US Dollar, Pound Sterling, and the German Deutsche Mark) could be placed in the following:

-- An outright donation with no payback (referred to as NDRP I).

-- Qarz-e-Hasna deposits for a minimum period of two years; no interest payments but principal repayments could be taken in Rupees or hard currency (NDRP II).

-- A profit bearing deposit for a minimum period of two years (NDRP III).

2. The total receipts from NDRP I, II, & III were Rs 2274 million. The major portion of these comprising donations (Rs 1845 million), Qarz-e-Hasna, (Rs 120 million), and profit bearing deposits (Rs 309 million) - major amounts received in the first year of the scheme. Subsequent years saw minor inflows.

3. Regarding the usage of NDRP funds, the equivalent Rupees generated under NDRP I & II were credited to the government account with State Bank of Pakistan (SBP). The foreign exchange component, against which these Rupees were generated, form part of the SBP's foreign exchange reserves. The federal government used these rupees to retire domestic debt of about Rs 1.7 billion, which carried a 17.3 percent rate of interest per annum. Inflows from NDRP III formed part of SBP's foreign reserves, while the generated rupees were credited to the mobilising institution. For collections in Rupees, the amount collected by commercial banks was surrendered to the relevant SBP local office.

4. In a nutshell, the NDRP could not do much about Pakistan's external debt that was in excess of $30 billion as political slogan of Qarz Utaro Mulk Sanwaro raised around $178 million in foreign currency which was equivalent to less than 0.6 percent of Pakistan's external liabilities.

In the face of above facts, which can be verified from the record of SBP and even available on website of PML-N (, there is hardly any need to comment further. The lesson is clear: economic issues cannot be solved through political slogan mongering. These require seriousness and consultation with best minds who are not only well-versed with the issues but who can also offer practical solutions. Where is the input from experts on reducing fiscal deficit, managing debt stock, resource mobilisation and controlling wasteful expenses? Where are the economic wizards of PML-N like Sartaj Aziz and Hafeez Pasha? Do they endorse what Dar is proposing? It appears Nawaz Sharif likes "home experts" than professionals. Thus the fate of prescriptions given by a person having half-cooked knowledge of economics is boldly written on the wall. There is no doubt in anybody's mind that we would face a complete disaster if such policies are adopted. Needless to point out that an accountant who considers himself all-knowing and does not bother to consult a team of able economists cannot tackle enormous economic national challenges.

Neither the Prime Minister in his long-awaited speech, nor Mr Dar in his Press conference, unveiled any pragmatic short and long term measures to come out of the existing economic mess and energy crisis. It is clear by now that PML-N has no workable plan and viable strategy to tackle issues like debt management, energy crisis, economic revival or resource mobilisation, let alone willingness to go for much-needed structural reforms.

The accumulated public debt - Rs 15 trillion internal and $60 billion external - constitutes nearly 67 percent of GDP, breaching the limit of 60% imposed under the Fiscal Responsibility and Debt Limitation Act 2010. This level of indebtedness has devastating effect on resources - the budget allocation of Rs 1.52 trillion for retiring public debt and payment of interest during fiscal year 2013-14 would prove short as there was a surge of Rs 180 billion in external debts alone during July 2013 due to depreciation of rupee.

It is true that public debt witnessed unprecedented rise from 2008-2013 - average rate of growth was 21.5 percent as compared to 6.6 percent from 2000 to 2007. It is shocking that public debts (in real terms) went to Rs 14.24 trillion in June 2013 from Rs 6 trillion in June 2008 registering an increase of Rs 8 trillion in just five years. The PML-N government, however, is not ready to learn any lessons from failure of PPP on this front. It has, like Zardari et al, no will to tax the rich and retire debts as has been done by the Hungarian government most recently - 'Learn from Hungarians', Business Recorder, August 16, 2013.

Undoubtedly, huge debt servicing is taking a heavy toll on economy - fiscal deficit for financial year 2012-13 jumped to 8.8 percent of GDP (Rs 1.835 trillion) as shortfall on the part of Federal Board of Revenue (FBR) alone was Rs 442 billion. The fast depletion of foreign exchange reserves - from $14.776 billion in July 2011 to $5.153 billion by July 2013 - aggravated the situation. Heavy repayments to the IMF and others and financing of current account deficit amounting to $2.3 billion in 2012-13 has left no choice but to approach IMF for a bailout package. However, it is not going to serve any purpose as Dar admitted that "in the first year, the IMF will give $2.2 billion to Pakistan while Islamabad is scheduled to pay back over $3 billion".

The situation on internal debt is equally disturbing. The Government of Pakistan, for the first time in history, borrowed from local banks over Rs one trillion during the fiscal year 2012-13, the trend continuing in the current fiscal year. The net government borrowing from domestic banks increased to Rs 1.012 trillion between July 1, 2012 and June 28, 2013 against Rs 629.9 billion over the same period last fiscal year. The federal government borrowed Rs 1.005 trillion for budgetary support as compared to Rs 696.5 billion during the corresponding period in the last fiscal year.

This reckless and unabated borrowing from commercial banks is not only retarding growth but also depriving private sector of the much-needed funds for investments. It is also forcing SBP to inject heavy amounts of liquidity in the banking system through frequent open market operations as high borrowings wipe out liquidity from the money market.

The only way to come out of prevalent mess is to accelerate growth, generate employment, enhance tax revenues, stop financing luxuries of elites and incurring losses in public sector enterprises (PSEs). But the present government like PPP-coalition government is not at all serious about it. During its election campaign, PML-N made tall claims that on assuming power it would get rid of the "cancer of debts." However, since assumption of power, Nawaz government is knocking the doors of international lenders even more vigorously than PPP. Besides IMF's lending of $6.6 billion to pay off previous loan, Finance Minister Ishaq Dar is approaching Asian Development Bank and World Bank for further borrowing. The main priority of the government is to rely more on external borrowing than mobilising own resources by taxing the rich and bridging the monstrous tax gap.

Internal debt is now 67 percent of GDP breaching the limit of 60 percent imposed under the Fiscal Responsibility and Debt Limitation Act 2010. The law requires the government to prepare and revise its debt management policy every year in January but nothing has been done as there is no debt reduction plan. Making things worse, the government is not inclined to impose fiscal discipline while indulging in reckless borrowing to pay off liabilities of the corruption-ridden inefficient PSEs. According to SBP, the funding of PSEs has inflicted a heavy toll on the economy, increasing the stock of total debt & liabilities (TDL) by Rs 500-600 billion.

All governments - civil and military alike - have failed to raise revenue to end debt enslavement. We can easily collect revenues to the extent of Rs 6 trillion, though actual potential is not less than Rs 8 trillion - 'FBR: new chairman, old challenges', Business Recorder, August 2, 2013. Unless it is done, Pakistan can never come out of the 'debt prison.' The Senate was informed on January 23, 2013 that over 3.39 million individuals had National Tax Numbers (NTNs), but only 885,999 filed their returns. The former Finance Minister, Abdul Hafeez Sheikh admitted that the number of income tax filers had drastically reduced to 1.6 million by 31 December 2012. The Senate was told that "a large number of businesses and individuals, who were regularly filing their income tax returns, are now avoiding their legal obligations by either under-declaring or incorrectly declaring their assets and incomes". PML-N supports these tax evaders as majority of them are part of the party and financiers.

FBR admits widespread tax non-compliance, but no government has ever taken any action against any official. FBR and tax delinquent sitting in the assemblies work hands in hands. They protect each other. There is no will to eliminate wasteful spending on monstrous government machinery and inefficient PSEs. The way the government is moving foreign debts would reach $75 billion in 2015 and domestic debt would be Rs 22 trillion. The policies of appeasement towards tax evaders, money launderers and plunderers of national wealth and monopolisation of resources by Riasti Ashrafiya (State Aristocracy) have pushed the country towards disaster - 'An elitist Pakistan', Business Recorder, July 26, 2013. The word 'austerity' is not in the dictionary of State Aristocracy - indomitable militro-judicial-civil complex and men in power. The habit of living beyond means - our national addiction - has turned the nuclear-powered Pakistanis into a nation holding the beggar's bowl. When foreign lenders see the lifestyle of our ruling elite, they immediately show indignation - it is hard for them to believe that the rulers of a penniless nation surviving on borrowed funds can display such flamboyance.

The reluctance to collect taxes from the rich and mighty, rather giving them free benefits and perquisites at State's expense, is worsening the miseries of the poor. There is no scarcity of resources as propagated by the rulers to shift blame on others, but the real cause is outlandish living of the elites off taxpayers' money-'Politics of plots and perks', Business Recorder, July 12, 2013 . Look at residences of judges, generals and high-ranking civil officials with army of servants and fleet of cars. Wasteful spending on State Aristocracy and unwillingness to tax the rich is playing havoc with the economy. Behind the present chaotic socio-economic and political situation in Pakistan, amongst other factors, is an ever widening gulf between the rich and the poor. With every passing day more and more people are being pushed below the poverty line - their total number is now not less than 60 million in a country where rulers unashamedly waste billions on their comforts and personal security - 'Finance Bill 2013: Apathy of Parliament', Business Recorder, July 5, 2013.

The present crisis testifies to the failure of power-hungry, money-greedy politicians and incompetent, inefficient and corrupt bureaucrats. Even the so-called technocrats always take the first flight to Washington after creating a mess - where are Shaukat Aziz and Abdul Hafeez now? In this bleak scenario, Riasti Ashrafiya is not ready to surrender extraordinary perks and privileges enjoyed by them at the cost of taxpayers' money. How can rulers and bureaucrats living in fortified containments, completely oblivious of the ordinary people's plight, feel the pinch of life's hardships?

We cannot come out of debt-enslavement unless we restructure our State on the principle enshrined in Article 3 of the Constitution - from each according to his ability, to each according to his work. For this, everyone should be given work and fair reward for that. There should be a complete change in the style of governance - the President, Governors, Prime Minister, Chief Ministers, ministers, parliamentarians, and high-ranking government officials should get 'consolidated pay package' liable to tax just like the income of an ordinary citizen. Palatial residences occupied by them should be sold or converted into income-yielding assets, and all perquisites of civil servants and public office-holders should be monetized to remove the burden off our country's broken financial back.

(The writers, tax lawyers and partners in HUZAIMA & IKRAM (Taxand Pakistan), are Adjunct Faculty at Lahore University of Management Sciences)

Here is the link:

Note: Reproducing this article in my Blog does not amount to my agreeing with the authors' point of view.

Thursday, August 29, 2013

Atum Bum Kay Tukray Ya Pakistan Kay Tukray!

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Weapons kill the same citizens!

My today's tweet:

While equipping their army with any weapons, the citizens must be cautious the same may be used against them also- lesson from Syria and co!

Wednesday, August 28, 2013

Pakistan: Live at Your Own Risk!

[Cost: Lives of 45 citizens of Pakistan. Lesson Learned: Fokkers grounded for passengers services. Outcome: No one is responsible!]

This time the temptation is irresistible. Long ago perhaps 15 years back I happened to go along with some kids to an entertainment park in Lahore. We bought tickets to enjoy rides, etc, inside the park. The back of the tickets read as: Ride at your own risk. I was staggered: are not the people running this business responsible for any mishap? I decided to write on this way of avoiding/evading responsibility, and thought we had accepted this way of behaving as moral and normal. The stream of thought also suggested that it is just like living in Pakistan at one’s own risk. I took care of one of the tickets and have still this ticket safe with me as I keep my National Identity Card.

But as happens with almost all of us, I forgot it, or ignored it thinking that what if I write something on it or doubting it will make any difference. We all forget or ignore or overlook many things like that. Out of many reasons for this behavior the most cogent one is that we lack a culture of complaint, or say we do not bother about our rights or freedoms for fear of inviting trouble. Not that we have no time, not that we are coward, not that we are accustomed to injustices, insults, etc; but for the reason that the culture of complaint have entirely been destroyed in our society. You go for a complaint and you are snubbed, you are insulted, treated like a criminal. Better leave this business and stay away at home and live there until the moment you are caught in a trouble! Hats off to those who still go for the complaint!

But this time in the wake of the Fokker crash writing on this way of irresponsibility is irresistible. The latest news in this regard is that the Federal Cabinet has decided to ground remaining Fokker planes for the passengers, while the Chairman PIA (Pakistan International Airlines) was insistent that they will not be grounded. All this shows that we do not follow any rules, schedules, etc, and learn only when we suffer losses. But of course this loss is not at our cost, it is at the cost of others. Let other people suffer and die. Our attitude is starkly immoral.

The other day I got an opportunity to have a little chat with a high-up of Civil Aviation Authority. He was quite satisfied and relaxed, and found no trouble with the crash. I asked whether the Fokkers have not completed their life, this one was made in 1964. He told it is not like that, after it has lived its flying hours life the engine is replaced. Then, why this crash? I probed. He declared emphatically: it is machine and anything can happen to it.

Lo! No one is responsible because we are dealing with machines (but they who deal in machines tell we are responsible) and machines can go wrong whenever they like to. But PIA doesn’t have its tickets back telling us this, it behaves like this: Fly at your own risk! The governments in Pakistan too behave like this: Live at your own risk!

From a minor accident in which an individual gets bruises to an accident in which the toll of human lives reaches hundreds of men, women and children, no one is responsible. This all happens by itself. Recall the history of Railways accidents, collisions, etc. Was ever anybody declared responsible? Recall road accidents, was anybody held responsible? Recall floods, inundations, etc, was anyone found responsible? Recall bomb explosions, ammunition depot explosions, was ever anyone held responsible? Recall political and military blunders and coups and the toll they took, were there any ones responsible for it? Recall police killings, were ever anyone found responsible? Recall the robberies, dacoities, murders, judicial, extra-judicial killings, tortures; recall the scams, swindling, corruption, but why recall? We have all these before us! How many of them held and punished? Recall the crash of the giant swing in Lahore and the suffering of the kids, was anyone responsible? Recall unfit food, unfit water, unfit fruits, unfit milk, and things like that, is anyone responsible for the harm they inflict to the users of these items/ Recall and forget!

This state of affair is a symptom of what’s happening on the surface; the causes lie deep down in our legal and value system. A society needs two things to live peacefully: first is laws, and second is moral values. We lack both. We have no rules, laws, constitution to follow or say we change, manipulate them to our advantage; thus, we are free from any responsibility that rules, laws, or a constitution lay upon us. This is diagnosed as the Rule of Lawlessness. And, ironically, every government tells that it is not responsible for that whereas establishing and maintaining rule of law is the supreme responsibility of a government.

As to values, we have turned into a society without any value. In other words it means our supreme value negates all those values that human civilization values most. This value is: Might is Right, discarded by the human society long ago the moment it stepped forward from a life and law of jungle.

We are regressing on the scale of human values. Just as many reports and indices rank countries for various achievements, the latest one, which comes to mind, being the failed state index, if there be an index ranking countries on the scale of immoral state, probably we will be among the ones on the top of the list. We are an Immoral State through and through. The problem with our attempts to go ahead with reforms, etc, is that every step toward any reformation starts with a certain value, and we loathe following values.

But what we need direly at this moment is a step toward strict implementation of rules and laws. We need Rule of Law. In other words, it means freedom under the law, not the freedom, we enjoy at this time, of playing with the law. It has two sides: first, those upon whom laws are imposed have their freedoms and are not free to act beyond the limits of those freedoms prescribed under the law, if they do so they be held responsible for the violation of those laws; second, those who enforce laws are also bound to act under certain laws, they are not free to act as they wish, and if they do so they be held responsible equally. We need freedom with responsibility that will be ensured only when all are treated equal before the law, and there is Rule of Law.

[This article was completed on July 13, 2006.]

Inkeshafaat Ka Lamha - Daikhain Kya Zahoor Mein Aata Hay!

Please note: This post has been shifted to the Urdu Blog - Civil Pakistan. To see it, click the link below:

Books or bombs?

In the midst of dust and destruction unleashed by the politicians, The Express Tribune of today, August 28, has the following story to exalt our spirits:

Matta: Change in the offing can be observed in many ways – in changing attitudes, changing congregations, changing social dynamics. The recent book fair in Matta – held from August 14 to August 15 – saw all that, and more.

[The Express Tribune, August 28, 2013]

With discounted books on subjects ranging from general knowledge to literature, the fair became much more than just a gathering. It came to symbolize a beacon of hope for the residents of this militancy-scarred area.

[The Express Tribune, August 28, 2013]

In this vein, the hundreds of visitors that attended came not just for the pages – they also came to reclaim their town, to reassert their choice: Books over bombs.

A heavy recent past

Tehsil Matta, which shares a border with district Dir and is approximately 21 kilometres from Mingora, was a stronghold for the Swat Taliban from 2007 to 2009. During these years, according to the district education department records, the Taliban blasted and torched 401 schools, most of them in Matta.

Jarringly, it was also the first place the militant group set up a Sharia court – the police station there was converted into the first Taliban station, where they used their own version of the Sharia law.

“It was a full-fledged Sharia court after they captured it from the Matta police,” recalls Abdullah, an educationist in the area. “In this building, they burnt the government records and doled out punishments for civil, familial and criminal cases.”

Hope in a tattered land

Locals believe that the effects of these years were deep rooted, and linger to this day.

“They tried to deprive the young generation of an education and push society into the Stone Age once again,” says Izahar Ayoud, a university student. “They would say that the courses taught in schools were not Islamic, and were leading the youngsters away from their religion. Because of this, they targeted the education sector directly.”

According to other local educationists, militants mostly used force on the illiterate youth of the area.

“The rate of unemployment amongst young men was very high and the militants greatly exploited this,” explains social activist Iqbal Ali.

For these reasons, and more, the book fair has meant so much to the residents of Matta.

“The students of this area have suffered a lot. Books were snatched from them and tools of extremism were handed over to them,” says Shahzada Burhanuddin Hassrat, the chief organiser.

Paper over gun powder

Even more encouraging is the fact that many female visitors also thronged the fair. They took a keen interest, and purchased a good number of books.

“A book fair like this is a pleasant breath of fresh air in this militancy-hit area,” emphasised Shazia, a teacher in a private school and also a master’s level student. “Authorities should carry it out on a regular basis.”

[The Express Tribune, August 28, 2013]

Among the visitors was also Dr Amjad, a social activist. “If such activities start in our society, gun culture will automatically fade away.

The love for books and education will move us towards moderation and development,” he said firmly.

Today, after the success of the fair, residents of Matta vow to earn positive name for the area, so that more and more people will choose books over guns.

Tuesday, August 27, 2013

Buying a car in Pakistan

In 2004, the Pakistani government placed an order for a luxurious Mercedes Cardiac ambulance at a cost of more than 13 million rupees (about $225,000). The vehicle, first of its kind, will be used exclusively by a select group of VIP patients in the capital, Islamabad. No doubt the privileged few will include civil and military bureaucrats and so-called representatives of the people.

But, at the same time, a large number of taxpaying people eager to buy a car are being denied a fair deal. Over the past couple of years the local car industry, which suffered negative growth of 24 percent during 1999-2000 due to lax demand, has witnessed a steep rise in demand that it is unable to meet. Needless to say, local car manufacturers and vending industries are exploiting this gap between supply and demand to their maximum benefit, and to the detriment of the consumer. Various factors, including car financing schemes introduced by local and foreign banks and a disarrayed transport system, have conspired in this situation. But the government ministries and officials concerned are also accomplices.

Misusing high tariff protection, which currently reaches to 150 percent on some vehicles, car manufacturers are selling their cars at twice the international market price. They charge full down payment at the time of booking and give a delivery date ranging from two to eight months. (According to some estimates, this period may extend from six months to two years.) For a spot delivery, the buyer has to pay a premium of 30,000 to 150,000 rupees, depending on the make and model of the car.

After persistent complaints from the few quarters advocating the interests of consumers, the federal cabinet agreed in February to reduce the import duty on completely knocked-down (CKD) and completely built-up (CBU) cars by 20-50 percent. Car dealers saw this as a mere eyewash -- a gentle rebuke to local car manufacturers that wont encourage the import of new cars. How can it? Even under the new duty structure, the price of an imported 800cc car is still higher than the price of the same locally assembled 1000cc car. A substantial reduction could make a difference; but that would harm that sacred cow; local industry.

The local car industry, even after years, is still heavily protected. Its vending industry, which provides it with parts and accessories, enjoys zero import duty on raw materials, and just 5 percent duty on the import of sub-components. What else do they need? A hapless people in need of personal cars with no free choice! Thanks to the governments protectionist policy, they already have these in abundance. People have no choice but to buy whatever the local auto industry offers them: no variety, no quality, an inflated price and a long wait. There are hardly 12 models in the local market, but if Pakistan opted for free trade, Pakistanis could choose from a range of more than 150 models with various prices and far better quality.

The crux of the matter is free trade: high tariffs on the import of new cars and a restriction to import re-conditioned cars have thrown cars way out of the reach of many people. So who does it benefit? Only the few that work in the local auto industry. To safeguard these few, the interests of the majority are being sacrificed on the altar of Localism, Nationalism, and Local Industry. So what if we are self-sufficient in car production! What does that mean for the consumer? Nothing!

Some time ago, the government was peddling the slogan: Be Pakistani, Buy Pakistani. What that really meant was: Be patriotic, buy low-quality, over-priced goods. Conversely, if the government reduces or minimizes the duty on the import of new cars, the price of cars will slide to an affordable level and the number of car owners in Pakistan will almost be doubled. If the restriction on the import of re-conditioned cars is lifted, this number may treble.

The fight is on. Local auto industry and its allied units enjoy a privileged position, which naturally they wish to defend. (They had a victory last year when they succeeded in stopping import of low priced Chinese 600cc car.) They are putting maximum pressure on the government not to reduce duty on the import of new cars, and not to allow the import of second-hand cars either. Meanwhile their opponents, car importers and consumer advocacy groups, are demanding at the very least a reduction in the import duty on new cars and a limited-period permission to import used cars.

But even if they win, the victory is likely to be short-lived. The official political philosophy in Pakistan hinges on a stolid protectionism. The government has applied for yet another exemption from WTO trade rules which are due to be implemented from 2005.

Only a demonstrable shift in public opinion disfavoring restrictions on free trade is likely to bring lasting change to the protectionist climate. Meanwhile it is tragic that in a world of countless cars, where high quality vehicles are churned out of plants every day, political boundaries have divided the world market into a plethora of smaller closed markets where people are tantalized with the idea of owning a car, but are denied the right to have one.

[This article was originally published in Tech Central Station on May 19, 2004.]

Monday, August 26, 2013

Jalti Marti Dunya Ke Liye Aik Shehr Ashoob

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A picture tells - What is being accomplished here?

This picture is worth a thousand words! 

Published in The Express Tribune of August 26, 2013, it's a sharp comment on the hidden face of Tehreek-e-Insaf.

Mission to fight superstition ends in killing

For nearly three decades, an earnest man named Narendra Dabholkar traveled from village to village in India, waging a personal war against the spirit world.

If a holy man had electrified the public with his miracles, Dr. Dabholkar, a former physician, would duplicate the miracles and explain, step by step, how they were performed. If a sorcerer had amassed a fortune treating infertility, he would arrange a sting operation to unmask the man as a fraud. His goal was to drive a scientist’s skepticism into the heart of India, a country still teeming with gurus, babas, astrologers, godmen and other mystical entrepreneurs.

That mission ended Tuesday, when two men ran up behind Dr. Dabholkar, 67, as he crossed a bridge, shot him at point-blank range, then jumped onto a motorbike and disappeared into the traffic coursing through this city.

[From The New York Times]

When detectives began putting together a list of Dr. Dabholkar’s enemies, they found that it was long. He had received threats from Hindu far-right groups, been beaten by followers of angry gurus and challenged by councils upholding archaic caste laws.

But Dr. Dabholkar never put stock in sudden breakthroughs, said his son, Hamid Dabholkar, as mourners filtered through the family’s home. “He knew this kind of battle is fought across the ages,” he said. “The journey we have chosen is one that started with Copernicus. We have a very small life, of 70 to 80 years, and the kind of change we will see during that time will be small.”

“Instead of dying of old age, or by surgery, which causes a lot of suffering, the death Mr. Dabholkar got today was a blessing from God,” the leader, a former hypnotherapist now known as His Holiness Dr. Jayant Athavale, wrote in an editorial in the organization’s publication, Sanatan Prabhat.

His wife, Shaila, recalled that her family had offered her an array of young men they considered marriageable, and she had chosen him for his idealism. “We thought only about society, and that was what we spoke about,” she said. “Even though we were married, there was nothing like romance, or anything like that. Both of us were patriots of idealism. We wanted a good society.”

[From the International Herald Tribune (Pakistan print edition) of August 26, and The New York Times of August 24, 2013.]

Puranay Kaalum - Iqtidaar Ka Khoonta Aur Muslim League

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Sunday, August 25, 2013

Free trade is cricket

It's possible that after more than half a century of animosity, India and Pakistan could be on the path to lasting friendship. That path is strewn with obstacles, many of them of Kashmiri origin, but just as the cricket matches are uniting the people, so free trade, a concept also espoused at January's summit, could prove a further catalyst to lasting peace and prosperity.

Both India and Pakistan have long histories of economic introspection and protectionism. Over the past decade, India has begun to throw off the shackles of its socialist economic model, abandoning its discredited drive for self-sufficiency and embracing globalization, privatization and trade liberalization. The resulting economic boom has provided a burgeoning middle class with unprecedented prosperity. Pakistan's government would do well to learn from its neighbor's success.

India-Pakistan trade relations have been compounded both by the tendency of each nation to protectionism. Protectionism, for a long time the economic mantra, is cemented and further justified by enmity. Trade between the two neighbors is restricted to a limited number of items.

But this situation has been economically destructive and has completely failed. Indian goods supposedly banned by Pakistan are on sale openly in every corner of the country. Smugglers provide Pakistanis with everything, from items such as tea, betel nut, alcohol and cement, to the staples of industrial and commercial activity like iron ore, chemicals, machinery and agricultural products. Conversely, Pakistani food products and synthetic fibers can be bought in India.

Inefficient local producers, who are not subjected to the rigors of the competitive market, gain from the embargoes, as do smugglers and black marketeers. Corrupt law-enforcers can also access a stream of revenue from bribery and racketeering. The interests of a minority are served under the banner of localism, patriotism and nationalism, while the majority suffers.

In a recent article on India-Pakistan trade, Shahid Kardar, a leading Pakistani economist and former finance minister of Punjab province, put it this way: "Should we continue to protect inefficient industry at the consumer's cost? Is there any justification for continuing to punish him if industry in Pakistan somehow just does not (or refuses to) grow strong enough to survive competitive pressures?"

In trade, producers and consumers behave like the citizens of the same country. To them, the whole world is a market without borders. Producers will sell where they get the maximum price for goods; consumers will buy from where they find the lowest price. Tariffs and embargoes amount to government interference in the free flow of goods -- to be circumvented where feasible. Illegal trade between India and Pakistan is estimated to be worth $2 billion, much of which is routed through countries like Dubai and Afghanistan.

What Kardar, the son of the famous Pakistani cricket captain Abdul Hafeez Kardar and nephew of equally famous wicket-keeper and batsman Imtiaz Ahmed, is talking about here is good cricket -- a game played on a level playing field with agreed rules; a game in which the only way to improve is to compete.

The same goes for trade. Competing with rivals brings quality, low prices and technological advancement. Free trade with India won't hurt anybody in Pakistan. It will benefit Pakistan's consumers and sharpen the skills of Pakistani entrepreneurs. And it will mitigate old enmities and help along better relations between the two nations.

[This article was originally published in Wall Street Journal Asia on April 15, 2004.]

Abbottabad Commission Report: Ghalat Sawaal, Sahi Jawaab

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Friday, August 23, 2013

Yeh Khabar Kya Kehti Hay?

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Kitaab Dost Aur Kitaab Dushman Muasharay

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Thursday, August 22, 2013

A non-American reading of the American Declaration of Independence

The Declaration of Independence of July 4, 1776, is one of the greatest documents human history has produced. The more one reads it, the more meaningful, more insightful it becomes. Another aspect is its way of asserting certain things negatively. That is what I am interested in presenting here. Let us see whether the Declaration substantiates this sort of reading between the lines.

The first para of the Declaration states that when a People separate (or dissolve the Political Bands which have connected them with another) from other People, it is necessary to declare the causes which impel them to the Separation.

The second para asserts that there are self-evident Truths, such as i) all Men are created equal; ii) they are endowed by their Creator certain unalienable Rights; iii) among these Rights are Life, Liberty and the Pursuit of Happiness. Then, it concludes that Governments are instituted among Men just to secure these Rights. The Governments derive their just Powers from the Consent of the Governed. When any form of Government becomes destructive of these Ends, People do have the Right to alter or abolish it. It is also their Right to institute a new Government as to them shall seem most likely to effect their Safety and Happiness.

The same para makes it clear that Governments should not be changed for light and transient Causes. But, if a Government reduces its People under absolute Despotism or absolute Tyranny, it is both the Right and Duty of the People to throw off such a Government.

As to what could be the causes which impel the Separation, it can be formulated now that Men have certain Rights; it is the only purpose of any Government to secure these Rights; and, if it fails in doing so, it must be overthrown.

Here we can ask what is absolute Despotism or absolute Tyranny. It is evident from the above that any form of Government may be termed as Despotic or Tyrannical that commits repeated Injuries and Usurpations as regards the unalienable Rights either of its own People or another People with whom it has Political Bands. As a result, any such Government loses its just Powers to rule (which it has derived from the Consent of the Governed) its own People or another People.

Now we may safely surmise that the causes other than the stated above are light and transient. They are not sufficient to impel a Separation from the Government of another People or throwing-off a Government of the same People. Hence, it may not be out of place here to put forward another conclusion, also: that, any Government be it of another People or of the same People makes no difference; what makes the difference is that how far a Government is successful in securing the unalienable Rights to its individual citizens.

After that, the Declaration submits the particular ways (or the Facts) in which repeated Injuries and Usurpations were, or can be, committed by one People (Great Britain) to another People (the thirteen states of America). They are18 in number but inestimable in importance; and include from the ordinary such as calling together Legislative Bodies at Places unusual, uncomfortable, and distant from the Depository of their public Records to the extra-ordinary such as forcing People to relinquish their Right of Representation in the Legislature.

Giving due importance to the Men under a Government, the Declaration describes the warnings given from time to time to British Brethren of the attempts by their Legislature to extend an unwarrantable Jurisdiction over another People. But they too, like their Government, were deaf to the Voice of Justice and Consanguinity. This gesture on the part of the Declaration suggests that the Men under a Government are equally responsible for the repeated Injuries and Usurpations their Government commits against them or against another People over whom it rules.

The Declaration has made recourse to two terms that need special attention: People and Men. Apart from other uses, the term People has been used to mean a collection of men and women with a distinct identity which appears to give them the status of a State or a Country, such as Great Britain, thirteen states of America. The Declaration introduces the other term, Men, where/when it has to describe the self-evident Truths. As these Truths are about the individual persons, men and women, so the term People has been replaced here by Men; meaning that Men (individual persons) form People, not vice verse. The argument to this effect is: That to secure these (unalienable) Rights, Governments are instituted among Men; and that the People, the Government, or other things are not Ends; they are only Means to the Ends, the Men. The Men, the individual persons are Ends-in-themselves.

From this reading of the Declaration, following points may be derived:

1. ‘Political Bands connect one People with another’ means governing the people; it may be a governing of the same people, too.

2. The Political Bands may be dissolved. Men have the right to overthrow a government of another people as well as of their own people.

3. There must be causes which impel one People to separate from another. The same causes may impel a people to dissolve the Political Bands with their own government, too.

4. If these causes do not exist, no Separation or dissolution of the Political Bands will be needed. There may be other light and transient Causes but they do not dictate change of a government.

5. The causes sufficient for a Separation or the dissolution of the Political Bands become manifest when any form of government usurps the unalienable Rights of the Men. No matter, it is the government of the same People or the government of another People.

6. The sole purpose of instituting a Government is to secure the unalienable Rights to individual citizens; so, who governs and whom it governs is immaterial.

7. It means the differences of State, Government, Race, Color, Culture, Religion, Ideology, Truth, History, Tradition, Language, Dialect, Class, Status, Manners, Dress, etc., are but light and transient causes.

8. Freedom movements, wars, etc., in the name of State, Government, Race, Color, Culture, Religion, Ideology, Truth, History, Tradition, Language, Dialect, Class, Status, Manners, Dress, etc., are misleading. They all ultimately lead to absolute Despotism or absolute Tyranny.

9. A freedom movement or war which does not culminate in the institution of a government securing the unalienable Rights to its individual citizens is a Tyranny in disguise.

10. What is supreme are Man or Individual and his unalienable Rights. As duties presuppose rights, it is his Right to protect his Life and Liberty; and, it is the duty of the Government or the State to protect his Life and Liberty so that he could pursue his Happiness in whatever way he likes.

11. Also that if there establishes a despotic or tyrannical government of the same People or over another People, the onus is upon the individual persons, men and women, of both People. British Brethren were equally responsible for the British Tyranny over the states of America.  

12. That leads us to the conclusion that any form of government or state is ultimately unable to protect the life and liberty of its citizens unless they themselves are prepared to protect their own lives and liberties.

In a nutshell, America’s Declaration of Independence did not declare the independence of America’s thirteen states only; it is a Declaration for all the individual persons to assert their independence and to rise up for securing their unalienable Rights: the Rights to Life, Liberty and Pursuit of Happiness.

[This article was completed on March 31, 2002.]

Puranay Kaalum - Muhim Juoon Ki Sarzameen

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Iss Khabar Ka Kya Matlab Hay?

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Wednesday, August 21, 2013

Figuring out what’s happening in China

Communist Party cadres have filled meeting halls around China to hear a somber, secretive warning issued by senior leaders. Power could escape their grip, they have been told, unless the party eradicates SEVEN subversive currents coursing through Chinese society.

These SEVEN perils were enumerated in a memo, referred to as Document No. 9, that bears the unmistakable imprimatur of Xi Jinping, China’s new top leader.
Seven Western Perils:

1. Western Constitutional Democracy;

 2. Universal Values of Human Rights;

3. Media Independence;

4. Civic Participation;

5. Pro-Market Neo-Liberalism;

6. Nihilist Criticisms of the Party’s past; . . . 

See the full story, “China memo reveals fears of Western influence,” in the International Herald Tribune – Pakistan print edition of August 21, 2013.

That’s life!

See it negatively or positively! That’s life! 

[The News, August 21, 2013]

Tuesday, August 20, 2013

Sahafat Ki Taqat Aur Faayeda

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Matiullah Turab - Afghan smith of metal and words

Matiullah Turab is nearly illiterate. He is a metal smith by day and poet by night. He relies on his mind to retain his poems.

“A poet’s job is not to write about love,” he growls, his booming voice blending with the ambient noise of the workshop. “A poet’s job is not to write about flowers. A poet must write about the plight and pain of the people.”

That’s Turab’s choice. He is a people of the poet.

“With his unflinching words, Mr. Turab offers a voice for Afghans grown cynical about the war and its perpetrators: the Americans, the Taliban, the Afghan government, Pakistan.”

Even in translation, his poetry exhibits brilliance:

War has turned into a trade
Heads have been sold
as if they weigh like cotton,
and at the scales sit such judges
who taste the blood, then decide the price


O flag-beareres of the world,
you have pained us a lot in the name of
you cry of peace and security,
and you dispatch guns and ammunition


O graveyard of skulls and oppression
Rip this earth open and come out
They taunt me with your blood,
and you lie intoxicated with thoughts of virgins.

[From the International Herald Tribune - Pakistan print edition]

See the full story in the New York Times of August 19, or International Herald Tribune of August 20, 2013. Here is the link:

Monday, August 19, 2013

What about internal sovereignty?

The so-called nationalists maintain Drone attacks are damaging the sovereignty of Pakistan!

These nationalists include Rightists of various hues such as Jamat-e-Islami to Jamiat-e-Ulama-e-Islam (F), and other somewhat liberal elements as well. They know that Pakistan is a declared ally of the US in the war against terror, and in that case, it’s of no significance whose Drones they are and whose territory they are targeting. Also, Bob Woodward’s Obama’s wars and Wikileaks establish Pakistan’s tacit approval of the Drone attacks.

Sure, the nationalists’ anti-American stance and dubbing the present government as US-backed validate their argument. Indeed, by way of inference also, most of these nationalists lean toward the Taliban who are openly attacking the sovereignty of Pakistan. But it seems they have no idea of internal sovereignty, but are concerned only about guarding the external sovereignty of Pakistan which is in no danger by the Drone attacks.

Is a country merely a piece of land whose sovereignty consists only in its territoriality? It could have been so in the olden times when principalities existed. Presently, sovereignty is a function of legality and constitutionality. When a new country emerges, its first urge is to attain legal constitutional status.

In today’s world, territorial sovereignty is just one part of the legal constitutional status of a country that endows it with its real sovereignty. This sovereignty is an internal phenomenon which gives a tract of land and a population of individual persons inhabiting that tract an identity and the status of a country. Internally this sovereignty is a collection of sovereign individuals whose life, property and rights/freedoms are ensured by the legal and constitutional arrangement of that country. Externally this sovereignty embodies in its territorial boundaries defined by the same legal and constitutional arrangement.

Thus, sovereignty requires safeguarding of the physical borders from the external invaders not as an end in-it-self but as a means to protecting life, property and rights/freedoms of the sovereign individuals who live inside those physical borders. Likewise, sovereignty does require protection of life, property and rights/freedoms of the individual persons from the internal invaders also. They may be Taliban, or other individuals, groups, forces, parties, or institutions. That sums up our argument: sovereignty derives from sovereign individuals who bind themselves into a legal and constitutional arrangement, and reverts to them.

Further to this, any such legal and constitutional arrangement creates various institutions to take care of the functions of the sovereignty of a country. In our case, the parliament, provincial assemblies, the courts, the election commission, auditor general, the armed forces, etc., are brought to life but to serve the same purpose. These institutions derive their existence and mandate from the legal and constitutional arrangement the soul objective of which is to help create such an environment where individual citizens are free to live as they wish and where their life, property and rights/freedoms are safe from encroachers like Taliban.

As against this, the nationalist clatter of sovereignty is just hollow. They do not see the writ of government being challenged and damage being done to the sovereignty of the country by these internal invaders and their mentors inside and outside the government. Is not challenging the writ of the government a serious crime? Is not taking up arms against the state a capital crime? Aren’t the Taliban waging an open and declared war against the state of Pakistan? In other words, against the sovereign individuals of Pakistan! Aren’t they inflicting unbearable losses to the life, property and rights/freedoms of the citizens of Pakistan? Isn’t sovereignty of Pakistan at stake at the hands of these insider invaders?

This hollow nationalism directly amounts to supporting the Taliban, a declared enemy of the legal and constitutional sovereignty of its sovereign individuals. These nationalists never raise any voice in favor of the sovereignty of Pakistan’s individual citizens. They never show any concern about the internal sovereignty of this country. Because not only is their campaign part of their misleading politics but they are the potential invaders of the sovereign individuals as well as the legal and constitutional sovereignty of this country.

Ironically, their focus is on the collateral damage of life and property done by Drone attacks, but they are blind to the same damage of far greater magnitude done by the Taliban. By their logic, if some criminals take a family inside their home hostage, and if police come to this family’s rescue, and as a result of police’s action one or two innocent persons lose their life, then it is police which is to be blamed, not the criminals. Common sense defies this nationalism!

Let these nationalists exalt the criminals. It is their right. But it is for the sovereign individuals to realize what their nationalism means and what it has in store for their sovereignty and Pakistan’s as well!

[This article was completed on December 5, 2010.]

14 August Ko Kya Hua!

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Sunday, August 18, 2013

Riyasati Ashrafiya (State Aristocracy) thriving on taxpayers’ money

Taxes for what
By Huzaima Bukhari & Dr. Ikramul Haq

The government’s yearning for “more and more taxes” has become a point of irritation for the citizens who argue where are the entitlements promised in the Constitution as quid pro quo?

Successive governments — military and civilian alike — have failed to convince the people that payment of taxes is their collective responsibility. The major reason for tax defiant culture in Pakistan is abuse of taxpayers’ money by Riasti Ashrafiya (state oligarchy) — militro-judicial-civil complex and public office holders — for plots, perquisites, personal comforts and luxuries.
People say if the government cannot protect their life and property, it has no right to collect taxes. In a democratic polity, taxes are collected for providing the citizens universal entitlements e.g. health, education, housing, transport, and civic amenities etc. The valid argument against paying taxes in Pakistanis is that it constitutes extortion by the ruling oligarchy for perpetuation of its control over resources.

The government’s yearning for “more and more taxes” has become a point of irritation for the citizens who argue where are the entitlements promised in the Constitution as quid pro quo? Excessive taxation without growth and equity has only compounded our economic ills — look at the number of fiscal deficit, quantum of internal and external debts, rate of inflation etc.

Voicing his concern, Nadeem-Ul-Haque, former Deputy Chairman of Planning Commission, in Reform or face fundamental ascendency, emphasised, “the state must first provide the social contract i.e. good law and order and security of life. It must dismantle the rent seeking that protects the rich….. Rent seeking relies on three main components: state subsidies, licensing and regulation; special perks and privileges for ministers and army and civil service employees and land distribution system that allows the poor man’s land to be acquired for the elite especially the army and civil service”.

An equitable tax system requires payments linked with benefits received from government services — the Scandinavian social democracy model is a good example to quote. In social democracies, the cost of government services are apportioned amongst individuals according to the relative benefits they enjoy. In economic terms, this is called “benefit principle” that presupposes determination of the incidence of public expenditure before deciding distribution of tax burden.

Tax policy should be aimed at achieving the cherished goal of distributive justice. The government should launch programmes financed mainly through taxes, to solve the twin problems of unemployment and poverty. These welfare-oriented schemes may also include free medical and educational facilities, low-cost housing, and drinking water facilities in rural areas, land improvement schemes, and employment guarantee programmes. Once people see the tangible benefits of the taxes paid, there will be better response to tax compliance.

Taxes cannot be collected through harsh measures and irrational policies as has been done recently by Ishaq Dar. The government, by its actions, must demonstrate to the citizens that money collected from them is spent for collective welfare. Presently, the ruling oligarchy is enjoying innumerable tax-free benefits from money collected from the masses, which get nothing in return. This is worst one can think of in any system of government.

It is an irrefutable fact that despite resorting to all kinds of negative tactics, blocking of bona fide refunds, the Federal Board of Revenue (FBR) has failed to improve tax-to-GDP ratio. It declined to 8.2 per cent during the financial year 2012-13 from 9.2 per cent in the immediate preceding year. With failure to collect target of Rs2381 billion, the fiscal deficit jumped to nearly Rs1700 billion proving that irrational tax impositions cannot avert fiscal disaster.

In 2004, the FBR promised 0.2 per cent per annum growth in the tax-to-GDP ratio for the next five years while submitting ‘tax projections’ and ‘revenue-to-GDP ratio’ to the International Monetary Fund (IMF) on the conclusion of 9th review under the Poverty Reduction Growth Facility (PRGF). The FBR informed the IMF that it would increase tax-to-GDP ratio from 9.2 per cent to 10.3 per cent in 2008-09 — in reality there was a decline of 0.4 per cent! Even the funding by World Bank for reforms (sic) of the FBR could not bring desired results as there is perpetual decline in tax-to-GDP ratio.

Economy as a whole in a shambles — growth in real terms is negative, debt burden is increasing monstrously, fiscal deficit has reached 68 per cent of GDP, inflation is again in double digit, taxes are evaded by the rich massively and whatsoever is collected is mercilessly wasted by the state oligarchy — who really matter in this Land of Pure.

Riasti Ashrafiya is thriving on the taxpayers’ money — they are the main beneficiaries of all the state’s resources. The list of tax free perquisites available to them is baffling and shocking — Perils of tax breaks, The News, February 17, 2013. The government’s kitty is empty because of wasteful spending on the perquisites of a handful few, on useless state enterprises and financing the monstrous government machinery that is both inefficient and corrupt.

The colossal wastage of taxpayers’ money on unproductive expenses gets further compounded when there is no will to take advantage of vital natural and human resources on the part of Riasti Ashrafiya. What makes things worse is the fact that many powerful political figures, in government and opposition, and strong men in khaki and mufti have stacked billions of dollars abroad when their fellow countrymen are dying of hunger — Our money, their banks, The News, July 7, 2013. These classes pay miserly tax in Pakistan but enjoy unprecedented tax-free benefits financed by the common people!

The ruling elites, representing militro-judicial-civil complex, industrialists-turned-politicians, absentee landlords and unscrupulous traders, are owners of huge movable and immovable assets created out of untaxed money. The issue of Pakistan is how to make tax incidence equitable and just. It is not possible unless all the generals, judges of higher judiciary, high-ranking civil officials get ‘consolidated pay packages’ and pay tax on that just as other employees do. These packages should be market-oriented but not tax-free.

The government, if sincere in collecting taxes from all, should immediately withdraw all exemptions and tax whitening schemes [section 111(4) of the Income Tax Ordinance, 2001], enforce agricultural income tax on absentee landlords earning net income of more than Rs400,000, reintroduce wealth tax on the super-rich and immediately legislate for asset-seizure law to counter money laundering, tax evasion and rent-seeking.

It is admitted by the FBR that even after “great efforts” (sic) less than 1.5 million filed income tax declarations for tax year 2012. In Pakistan, the total number of mobile users alone is 125 million, out of which 5 million are rich and pay more than Rs40,000 as annual bill — they are potential taxpayers. Why have they not been compelled by the FBR to file returns? It testifies to the FBR’s inefficiency and ineffectiveness.

These days, the FBR is taking undeserved credit for a new initiative (sic) by establishing the post of Commissioner (Headquarters) Broadening of Tax Base given the task of adding a few thousands new taxpayers this year. This Commissioner sitting right in the FBR is completely oblivious of ground reality that how easily we can raise the number of tax filers to 4 million, if not more — presently 50 million plus are paying adjustable income tax for usage of mobile service and selecting from them who earn taxable income, but not filing tax declarations, is not a difficult task. But the FBR wants many new posts to do it! It can be done with a simple software application — Member IT of FBR can ask service providers to identify who are paying Rs40,000 or more per annum.

[The writers, tax lawyers, are Adjunct Professors at the Lahore University of Management Sciences (LUMS).]

[This article first appeared in The News on Sunday, August 18, 2013.]

Note: Reproducing this article in my Blog does not amount to my agreeing with the authors' point of view.