Secretary General of the United Nations Ban Ki-moon in his second appeal to the international community to support Pakistan’s 20 million flood-ravaged people, succeeded in generating 2 billion dollars in additional pledges. However, the pledges were accompanied by exhortations to the government of Pakistan not only to ensure that the aid is distributed in a transparent manner, but also to take appropriate measures to generate additional revenue for the flood victims on its own.
The list of these measures include reducing subsidies to all sectors, particularly the energy sector as well as raising taxes, though one would urge the government not to raise taxes on the sectors that are already heavily taxed but, instead, impose taxes on those who inexplicably remain outside the tax net. These latter include the country’s rich landlords, heavily represented in the country’s legislatures, who must be compelled to begin paying a tax on their income.
While one had become used to senior members of the Obama administration including Hillary Clinton, Secretary of State, and Richard Holbrooke, Special Representative to Afghanistan and Pakistan, frequently urging the government to tax those rich and influential who remain exempt, to increase the appallingly low tax to Gross Domestic Product ratio, by far the lowest in the region, and to strengthen transparency and accountability mechanisms, yet what was unprecedented was that other donors – multilateral institutions and countries – joined in the chorus. “It is critical for the government to ensure full transparency of cash flow,” Tadamichi Yamamoto, Japan’s special representative for Pakistan and Afghanistan told the meeting. Germany’s Development Minister Dirk Niebel said Pakistan must be “realistic” and raise more of its own money to rebuild the country.
And the World Bank President, who traditionally shies away from publicly exhorting countries to clean house, warned during the conference that “to make most effective use of help and even to secure full donor support, the government will need a reconstruction founded on transparency, accountability, flexibility, backed by law.” On the matter of previous assurances by Pakistani officialdom that transparency and accountability would be guaranteed, an assurance that was repeated by Shah Mehmood Qureshi at the conference, the President of the World Bank noted, “senior Pakistani officials have told us that this is what they wish to do, yet experience from many countries warns that the machinery tends to slide back to business as usual.”
As matters stand today, with the floodwaters beginning to recede even in Sindh, nearly six weeks after the floods began to ravage large parts of the country, the federal government has still to take measures designed to increase revenue collection. The government has announced that it would divert budgetary allocations for development and current expenditure to the flood-hit areas. However no other details have been announced. The Finance Minister’s statement at the Higher Education Commission (HEC) that he would slash allocation for higher education as part of re-prioritising expenditure was, disturbingly, reversed on the instructions of the Prime Minister; and showed that the Finance Minister had not bothered to discuss which expenditures are to be diverted for the flood victims in the cabinet.
Meanwhile, reports that donor agencies as well as countries, are seriously concerned over the federal government’s failure to take any decisions with respect to a flood tax have recently surfaced. In addition, there is rising concern that the failure of the legislature to agree on an accountability law, even two and half years after the present parliament was democratically elected, is sending the wrong signal to the international community. One would hope that Law Minister Babar Awan takes cognisance of this element that is impacting on the country’s ability to generate funds for the flood-affected people and seeks a speedy consensus on this law. – brecorder
