In a lecture he delivered at an Islamabad think-tank the other day, US Ambassador Cameron Munter had some candid remarks to offer to those raising eyebrows over what they regard as intervention in Pakistan's internal policy matters. "We appear to be intrusive", he said, "because we care, we are the largest donor, our aid comes as outright grant of assistance, which is different from loans," adding "we'll continue to be this way."
And then he went on to be just that way, reiterating the demands, among other things, that the government broaden the tax base, improve revenue generation, stamp out terrorism and extremism and expel international terrorists. He said that expanding the tax base is crucial for Pakistan's long-term development need, and that, more importantly, this would signal to its donors that international assistance is being used for right purposes "and not covering the Pakistani citizens who don't pay their share [of taxes]."
It may be recalled that while visiting Pakistan about a year ago, US Secretary of State Hillary Clinton had repeatedly argued that if Pakistan does not want the US money it should not take it; that no one was forcing it to take it. The objectors though argue that the money comes not as a favour, but to help Pakistan help the US achieve its objectives. Of course, there are no free lunches. Nonetheless, there is confluence of the two countries interests on some important issues. The US certainly wants to see Pakistan become stable and strong so it can deal effectively with the challenges both countries face from violent extremists and foreign terrorists.
Notably, US officials, including Clinton, have been pointing out that Pakistan's tax-to-GDP ratio at 9 percent is dismally low, and that the country must tax its own rich instead of expecting American taxpayers to cover its citizens who don't pay their taxes. Even those who take issue with the US' intruding approach want the rich to pay their dues to the state. The Ambassador must have touched a chord among many when he advised the government against protecting the interest, of a few which, he said, is "happening too much here." One recent example is the decision to defer the imposition of RGST in the face of fierce resistance by a moneyed class.
Another longstanding issue is the refusal of the prosperous and powerful landowners to pay tax on agriculture income. Ability of influential sections of society to get huge loan write-offs is yet another strain on our fragile economy. Though unwittingly, the American intervention to seek better economic management, in particular its demand pertaining to expansion in the tax base, could prove a blessing in disguise considering that our ruling elite are much more willing to comply with US' wishes than those of the people of this country. Yet the unsavoury reality is that a precarious economic situation has substantially undermined our national sovereignty. We cannot pretend to be independent while being as dependent as we are at present on American assistance that Washington directly or indirectly provides us.