One of the major problems in Pakistan is the amount of revenues collected do not match either the adult population count that can pay taxes and/or the needs of both those who can and those who cannot. State institutions are still weak, uncoordinated and more than often standing in each other’s way, with the administrative staff not qualified to run an institution on modern lines. Knowledge about how a modern state system should work and how the Pakistani state is working is a basic precondition for all to be able to identify ourselves with the state and its institutions, to develop responsibility for their wellbeing and to be able and ready to contribute to it. The education and training received in our schools and other educational institutions do not qualify us enough morally to become good citizens.
The primary obligation of each citizen to the state includes contributing to the GDP by my work or my business. Paying taxes according to my income; it also includes other non-material contributions like giving ideas, helping to improve the environment and many others.
Paying taxes being one of the basic obligations in a modern state has not been explained and implemented sufficiently in Pakistan. Most people in the world don’t like to pay taxes because it means to surrender a part of the money that we have earned while working hard. There are legal and illegal ways to avoid or minimize taxes in all countries as well as in Pakistan but first the first one must recognize and accept the necessity of paying taxes.
Consecutive World Bank teams trying to put Pakistan’s economy right have complained that Pakistan is not collecting enough taxes. And that is not because the economy is that bad or the GDP so low, but because those who would be the main taxpayers are not paying their dues and the state is not organized enough to go after tax evaders. Most of the tax evasion is due to blatant and rampant corruption by the tax collection entities. This is made possible by complicated tax regimes that are beyond common understanding and facilitate widespread corruption. The tax department is ill-organized, and neither trained nor equipped to manage taxing a population of over two hundred million. What are need is a computerized taxpayer’s register and an efficient handling of incoming tax declarations of citizens as well as a tough prosecution of tax offenders.
Everybody looks to the state and its institutions for health care, education, cleanliness, jobs, road construction, defense and many others things. But how is a state supposed to finance all that? The deficit over the years because of poor tax collection has been covered by borrowing money in the international market. That is major reason for the high amount of debt Pakistan has accumulated, the debt servicing is damaging our economy today and for the years to come.
Taxation is the lifeblood of the effective, modern state without thus nearly all of the other functions and aspects of the modern state would not be possible. Because taxation is one of the most widely and persistently experienced relationships that individuals have with their government, it helps us define the meaning of citizenship. Taxation institutionalizes the concept of a social contract between the state and its citizens, between the sovereign and its subjects.
To foster economic growth and development all governments need sustainable sources of funding for social programs and public investments. Programs providing health, education, infrastructure and other services are important to achieve the common goal of a prosperous, functional and orderly society. Revenues not only pays for public goods and services; it is also a key ingredient in the social contract between citizens and the state, helping define the social and cultural meaning of citizenship. The process of paying taxes helps forge civic identity; it validates the financial responsibilities of being part of a broader political and social community. It signifies who is a member of such a community, or how wide we draw the circle of “we”. One central element of the formation of a nation is that all its members should be equal -equal not economically but in the front of the law and equally accepted as members of the nation beyond religious, ethnic and other differences. All contribute to the common wellbeing according to their means. And there is a solidarity between all members of the nation that includes material, financial and emotional support in times of need.
The fact that the Pakistani nation until today is weakened by religious, ethnic and other exclusiveness is also caused by the missing understanding about the idea of a nation and the solidarity needed between citizens among each other and with the state. Well-to-do citizens have to recognize that wealth creates social obligations, towards, less fortunate citizens and towards the state is meant to promote the common good for all. Incidentally this is also one of the prime messages of Islam. Even poor citizens have to be aware that they have an obligation towards the state and the other members of society and each one has to contribute something. That is the obligation of education and in a Muslim country, Islam should be able to help that understanding.
The current political system of parliamentary democracy in its beginnings had a slogan: no taxation without representation. “No taxation without representation” is a political slogan originating during the 1700s that summarized one of 27 colonial grievances of the American colonists in the “Thirteen Colonies” and became one of the prime causes of the American Revolution. Many in those colonies believed that, as they were not directly represented in the distant British Parliament, any laws it passed affecting the colonists (such as the Sugar Act and the Stamp Act) were illegal under the Bill of Rights 1689, and were a denial of their rights as Englishmen. This slogan is almost forgotten today.
Representation means formal representation as a member of parliament or in an elected position. People who are aiming for such a position have to be extra careful to have fulfilled all their obligations as citizens. And there has to be a fool-proof system to check it before one is elevated into an elected post. That includes that wealth should be estimated honestly with no hidden accounts or properties. And it should include laying open the financials of the wife and grown-up children as well. Pakistan has to go a long way, however, if we want real change and a ‘Naya Pakistan’ there is no way around it.
The writer is a defense and security analysis.