State governance in 3rd year: challenges

The PTI government had distinguished itself from its predecessors by doing away with many subsidies and concessions to select businesses and sectors and withdrawal of grants to members of National and Provincial Assemblies. Both were commendable deeds and in larger public interest. The withdrawal of concessions to select groups provided an even playing field to all business and industry segments. The withdrawal of grants to legislators ensured that the public money is not squandered away in personal image building of legislators in their respective constituencies at the taxpayers’ expense, and more significantly, subjecting any new entrant in politics at a great disadvantage.

In the third year of its five-year tenure, the PTI government is reported to be considering the proposal of the textile sector for restoration of zero-rating regime. The alternate proposal of the industry is to reduce the sales tax rate from 17 percent to a lower percentage like five percent on the five export-oriented sectors.

The PTI government, in an about face, has announced grant of Rs 500 million to each member of National Assembly and provincial assemblies under sustainable development goals to undertake development schemes in their constituencies. This has been the long-standing demand of PTI legislatures.

The Federal Board of Revenue (FBR) has strongly opposed the proposal of the textile sector for restoration of zero-rating regime or applicability of lower rate of sales tax on five export-oriented sectors. On January 6, 2021, a former FBR chairman is reported to have tweeted, “Zero Rating of Export Sector. I fought and won the war for abolition of zero rating for export sector. Reversing it will be regressive. If this is done then we should forget about any tax system in Pakistan. Improve refund system. In this age of technology this will be absurd.” Textile industry or ‘textile lobby’ is making efforts aimed at winning some concessions from the government.

In principle, concession to one industry or business is always at the expense of other industry and business and is discriminatory in nature. It is not in the larger public interest. The loss of revenue by FBR on account of abolition of zero-rating has to be made good from other industries and businesses.

The allocation of Rs 500 million to each member of National Assembly and provincial assemblies to enable them to carry out development schemes in their respective constituencies will be carved out of the government funds allocated for public welfare and at the expense of government social programmes, notably, the Ehsaas programme.

The past record, time and again, has demonstrated that these grants have been squandered away to fund half-baked and short-lived publicity-oriented projects in support of the incumbent legislator come election time. Such grants are hardly spent in public interest. Probably, this reality constituted a rationale for PTI to do away with such grants to legislators.

The PTI would do good to itself and the nation if it holds its ground and resists the temptation of short-lived gains and internal and external pressures to surrender what it has gained in its ongoing tenure thus far.

(The writer is former President Overseas Investors Chambers of Commerce and Industry)

Copyright Business Recorder, 2021