Editorial - Powerful pressures - Thursday, March 10, 2011

Source : http://thenews.com.pk/TodaysPrintDetail.aspx?ID=35414&Cat=8

Under strong pressure from the visiting IMF team to cut down on subsidies, the government has reportedly agreed to raise power tariffs by six percent within 48 hours. The impact of this on households, particularly over the summer, is not hard to imagine. The increasing rates of utilities have already placed an enormous burden on people; for many it is an impossible one to meet. Combined with the prospect of a whopping raise in power rates, we have a situation in which loadshedding has already begun in Punjab and is threatening to increase over the coming weeks. People naturally resent paying for something they do not even receive, and this resentment has grown with hours of power cuts and larger totals at the end of bills. In addition, we are to see a 15 percent tax surcharge and 2.5 percent excise duty as part of an effort to bring in more desperately needed revenue. Sales tax exemptions are to be done away with, and these measures are to be imposed through a presidential ordinance rather than going through parliament where they are bound to run into strong opposition. This makes a mockery of our democracy and people’s right to have a say in decision-making. In bypassing parliament, this right is effectively being denied to them. The notion of parliamentary sovereignty exists only on paper and in the speeches of politicians.

While the consequences of the 2008 accord with the IMF are now becoming clear to us, the fact of the matter is, we do require more revenue. How can this be generated without placing such an immense load on the sagging shoulders of ordinary people? In their appearance before a sub-committee of the Public Accounts Committee, top FBR officials had said there was a plan to add 700,000 tax payers to the 2.3 million people who currently pay taxes. If this can be effectively done, it would help bring in the revenue we so desperately need. Other flaws in a taxation system which leaves some of the country’s wealthiest individuals entirely out of the net and allows others to pay only small sums, quite at odds with their assets, need also to be remedied. While more revenue is needed, only a callous and incompetent government would try to bring this in by placing a further squeeze on the poor and sparing those who possess large sums of money that they are unwilling to pay tax on. It seems odd this was not emphasised to the IMF during talks that have ended in decisions that will further jeopardise the welfare of our people.

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