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We are fast approaching the general elections, scheduled for February 08, 2024. However, the post-election landscape poses daunting politico-economic challenges for the already troubled economy. Concerns about fairness of elections persist among political parties.

Pakistan Tehreek-e-Insaf (PTI) faced a setback, many called a death blow, as the Election Commission of Pakistan (ECP) deprived it from election symbol (bat) for irregularities (sic) in internal elections on the complaint of some disgruntled and hostile persons, yet claiming to be members! Although Peshawar High Court overturned the decision and instructed ECP to provide PTI its election symbol, a leave to appeal fixed on emergent basis, heard post haste, by Supreme Court (SCP) snatched from millions of voters an inalienable right under Article 4 of the Constitution.

Many constitutional experts believe that if its ratio decidendi is not overturned in review or by a larger bench, it will haunt Pakistan like the infamous Maulvi Tamizuddin Khan (1955) judgement.

Following two days’ hectic hearing, a three-member bench of the Supreme Court disagreed with the Peshawar High Court’s findings, asserting that the ECP did not have jurisdiction to question or adjudicate intra-party elections. The Supreme Court held that “accepting such an interpretation would render all provisions in the Act requiring intra-party elections meaningless and without consequence”.

The Supreme Court’s decision has elicited severe criticism from the general public and experts alike, calling it indefensible, serious setback to democracy. A few do justify it on the pretext of implementing “democratic values within political parties”, which is correct, but then it should apply to all indiscriminately.

We know this is not the case in Pakistan, then why to target only one political party? Instead of soliciting the services of Attorney General for Pakistan, leave to appeal in Supreme Court was filed by engaging a private lawyer.

For many, resembling Kafka’s trial, it centred on technicalities rather than determining jurisdiction of ECP vis-à-vis to adjudge veracity of party elections and fundamental right available to citizens to vote for the party of their choice. It is cardinal principle of law that no subordinate legislation can override any provision of the Constitution, the supreme law of the land.

The upcoming government, shaped by pre-poll tainted elections, will grapple with myriad of challenges including political instability and economic revitalization. Immediate relief measures need to be extended to families already burdened by soaring inflation and high prices of electricity and petroleum products.

Another debatable subject is the commencement of restructuring of the country’s apex revenue authority. Kept secret from public till today, the caretaker government is in the process of approving a restructuring plan, aimed at separating tax policy from revenue division and also separating Customs from revenue collection mechanism. However, officials from Inland Revenue Service (IRS) of the Federal Board of Revenue (FBR) have expressed reservations about these proposed actions.

They contend that these measures may not contribute positively to revenue collection, rather introduce additional complexities that could impede ongoing efforts and potentially have adverse effects on overall revenue collection. This ongoing debate underscores the need for careful consideration and evaluation of the potential consequences before implementing significant changes in the structure of revenue collection agencies.

In our numerous articles [Need for National Tax Agency, Business Recorder, November 1, 2013, Case for All-Pakistan Unified Tax Service: PTI & innovative tax reforms, Business Recorder, August 31, 2018, Case for All-Pakistan Unified Tax Service: PTI & innovative tax reforms, Business Recorder, August 31, 2018], Need for National Tax Authority, Business Recorder, October 20, 2017, Doing business under scattered taxation, Business Recorder, September 7, 2018, Overcoming fragmented tax system, Business Recorder, October 19, 2018, A case for National Tax Authority—I, Business Recorder, November 30, 2018, A case for ‘National Tax Authority’—II, Business Recorder, December 2, 2018, Time up for fiscal integration—I, Business Recorder, December 21, 2018, Time up for fiscal integration—II, Business Recorder, December 23, 2018, these writers have consistently advocated the establishment of a federalised tax entity that comprehensively addresses revenue collection matters at both the federal and provincial levels. Our focus extended to highlighting concerns and proposing solutions in relation to the need for simplified taxation laws.

Emphasising the importance of such laws, we stress their potential to foster growth providing a user-friendly framework for implementation, benefiting both individual taxpayers and corporate entities. The objective is to establish a tax system that reduces the effects of tax evasion, fostering an environment conducive to growth and easy navigation for all stakeholders. In essence, our taxation system aims to be straightforward and transparent, featuring a broad tax base with low tax rates, discouraging the practice of granting numerous exemptions.

Instead of simplifying the tax system and laws to stimulate economic growth, our approach is making superficial changes that only serve to generate more confusion and obstacles for businesses. FBR’s reform agenda under the caretaker government appears to hinder rather than facilitate progress.

Secondly, the interim government has no authority to take long-term policy decisions in the light of section 230 of the Elections Act, 2017 and Article 224 of the Constitution. It is crucial to shift towards enhancing transparency and user-friendliness of the tax system, while also incorporating limited exemptions and maintaining low tax rates to attract investment.

A low tax rate ensures stability, offering businesses a reliable framework for planning and operations. Clarity in Pakistan tax laws is essential for instilling confidence in investors, further promoting investment influx. This investor confidence, when coupled with a straightforward tax structure, plays a pivotal role in job creation, allowing businesses to flourish in a supportive environment and contributing to the overall growth and prosperity of the economy.

Although tax reforms in Pakistan commenced with the idea of a unified tax authority for nationwide revenue collection but according to media reports, there is contemplation about dividing FBR into multiple boards and entities, potentially involving a significant presence of private individuals overseeing these boards. This approach is flawed on several levels and is unlikely to yield positive outcomes in achieving desired revenue results. Instead, it would add to the already humungous government expenditure.

A similar attempt to oversee Money Laundering and Financing of Terrorism (ML-FT) issues was made by introducing various committees and bodies governed by politically exposed persons and private entities known as self-regulatory bodies (SRBs) in place of establishing a unified financial crimes agency to address all financial crimes.

This structure grants these SRBs unfettered powers, disregarding the fact that members of such bodies are considered high-risk and known as the gateway to money laundering due to the nature of their profession. Relying on these SRBs to counter financial crimes is akin to appointing a cat to guard the milk.

Similarly, our current proposal to overhaul the apex revenue entity, granting heightened authority to private individuals and entities in tax collection and policy, is likely to meet a similar fate. Instead of prioritizing enhancements in governance and implementing measures to elevate our financial inclusion ranking, foster documentation of economy, and promote collaboration among institutions, coupled with the establishment of rigorous controls and advanced technological monitoring for improved revenue collection, we seem to be exacerbating the complexities within our system.

Elections in Pakistan are around the corner when a new government would take charge. The primary duty of the caretaker government should revolve around ensuring fair and transparent elections rather than undertaking major reforms in the apex revenue authority during this crucial period. It is role becomes questionable because of the absence of due diligence in understanding the consequences and effectiveness of the proposed reforms aimed at achieving desired revenue collection results.

Haste makes waste especially in the absence of due diligence. Priority should be to initiate a comprehensive debate actively engaging all stakeholders, seeking their input and suggestions, and subsequently deferring these matters for consideration by the incoming government. With only a few days remaining, this deliberative approach will enable the new government to make informed decisions efficiently and effectively, avoiding unnecessary delays in decision-making process.

Copyright Business Recorder, 2024

Huzaima Bukhari

The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS), member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). She can be reached at [email protected]

Dr Ikramul Haq

The writer is a lawyer and author of many books, and Adjunct Faculty at Lahore University of management Sciences (LUMS) as well as member of Advisory Board and Visiting Senior Fellow of Pakistan Institute of Development Economics (PIDE). He can be reached at [email protected]

Abdul Rauf Shakoori

The writer is a US-based corporate lawyer, and specialises in white collar crimes and sanctions compliance. He has written several books on corporate and taxation laws of Pakistan. He can be reached at [email protected]


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