Charges on flood surcharge

Thoughts of relief and reconstruction are dominating headlines as floodwaters have started receding from most parts of the country. While not much has been finalized yet, a major moot point has become the proposed flood surcharge.
Until damage assessment reports from the World Bank and ADB are made public, all efforts and estimates are mere speculation. Still, gaming probable solutions is a positive development for the government in Islamabad.
Observers view the one-time levy as a tool to balance the governments fiscal deficit.
The publics thinned out trust in the present dispensation coupled with the lack of transparency raises fears that the funds may not be spent for the purposes they are being collected.
Budgetary buffers, in the amounts of Rs100 billion, have been in place to account for unforeseen circumstances. In addition, the BISP and IDP heads overlap for the immediate relief and rehabilitation of the displaced population.
Domestic resource mobilization remains a key factor in getting the reconstruction work on its way. Flood surcharge, in essence, is a strategy to draw on the thin pockets of the tax-paying community of Pakistan.
In the event of a flood surcharge on incomes of the salaried class, a backlash is likely given that large swathes of the business and agricultural community evade their dues to the state.
Those that do pay their taxes are already overburdened due to the sticky inflation that is all set to jump in the coming months as a result of the floods.
Taxes, even one-time levies, need approval from legislators before they can be enforced. And as of now, the political parties, particularly PML-N, the major opposition party, have stated their position against such a tax.
Perhaps they are drawing lessons from their 1 percent surcharge after the 1992 flood, under the watch of Sartaj Aziz. When asked about the impact of the previous surcharge, the former finance minister had no recollection of the details and impact of the levy. He also chose to reserve his comments as to what strategy should be followed this time around.
While the need for raising funds is urgent, the governments levy may be viewed by those burdened by it as extortion and the already weak government may not be able to withstand a backlash from their tax paying community.
Just to appease the detractors, for now, the government has issued statements shelving the proposed surcharge. But watch out for another trick, you tax payers.