Tax & representation

Published June 22, 2024

THE taxation measures outlined in the budget for the incoming fiscal year have triggered a lot of concern among those directly affected by them, especially people in the salaried class, who are understandably disturbed at the prospect of giving up more of their income to the government at a time when real wages have been shrinking rapidly due to inflation. Already under extreme economic pressure, salaried individuals are increasingly wondering why they should pay more taxes to the government without getting some improvement in basic public services in return. They have a fair point. Successive governments have, over the past few years, paid little attention to public needs, and their policies, as a result, have been mainly prescriptive. Over the last two years, in particular, the focus has been on curtailing ‘non-essential’ expenditures to appease the IMF, which has invariably meant axing spending on public services and development. Taxation without representation is tyranny, as they say, and it is no wonder that the public is growing agitated. A small ‘remedy’ to this re-appropriation has been the creation of semi-discretionary funds for parliamentarians to allocate to minor development projects in their constituencies.

The quantum of these funds has been set at Rs75bn for the next fiscal year, slightly higher than the approximately Rs70bn the government expects to collect through its revised income tax rates and slabs. However, even if one assumes that these funds will not be misappropriated, they are unlikely to be utilised fully towards servicing public needs. Last year’s budget for these funds was Rs90bn, of which only around Rs38bn had been spent by February this year. This is no surprise. The people tasked with spending this money — ie, our MNAs — are rarely connected to their constituents to the extent that they know exactly how spending must be prioritised. In any case, it is not their job to fix roads and provide utility connections. Such tasks and these funds should, instead, be left to local governments, which are much more connected to the people at the grassroots level. Doing so will not only strengthen the foundations of Pakistan’s democracy but will also take the sting out of the higher burden of taxes as people will at least have a direct say, through their LG representatives, in deciding on what their money should be spent.

Published in Dawn, June 22nd, 2024

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