The raging debate in Pakistan over plans to introduce a new sales tax has become controversial and not entirely without reason. Opponents of the proposed RGST or reformed general sales tax want to block its enforcement on the grounds that such a tax will further burden Pakistan's population at large.
Beyond its immediate effect, the controversy must be seen through the prism of Pakistan's political and economic development as well as its history. For long, the country's successive rulers including those represented by some of the political players now opposing the proposed tax, have blatantly ignored genuine tax reforms.
Consequently, almost 99 per cent of Pakistan's population of about 180 million has been left out of the country's income tax net. At the same time, Pakistan has become a land of an increasingly glaring contradictions. Even though more than one-third of the population lives below the poverty line, Pakistan's leaders take pride in having nuclear weapons.
When even a modest part of the population is yet to acquire basic literacy, the country boasts of having one of the world's largest conventional military forces. Better still, within the prism of contradictions, armed with increasingly pathetic set of indicators in vital areas such as basic medical care or popular access to fundamental needs, Pakistan's leaders continue to claim they are presiding over a country which is pivotal to securing global interests.
While the country's leaders claim to be successfully building up a new edifice of democracy which they say will provide Pakistan with long-term stability, their failure to begin tackling real life issues such as rampant corruption points towards a gap between reality and a façade of prevailing circumstances.
Within this complex picture, however, neither the ruling elite nor leaders of the opposition can clearly be absolved of responsibility. The complex challenge of reforming Pakistan is far too big for any one player or set of players to successfully tackle on their own.
But going by the acrimony surrounding the proposed RGST, it is abundantly clear that Pakistan's fate appears to be locked more in the business of its leaders seeking to score points rather than to work towards achieving a broader consensus. Indeed, the business of scoring points may help one set of political players appear to have an edge over the other.
But such point-scoring certainly does not help draw together the kind of broad framework that will produce the building blocks to rid Pakistan of its multi-faceted challenges. While some may take issue with the form in which the RGST is being applied, the truth is a much more fundamental one — Pakistan has lived beyond its means for too long.
Indeed, the make-up of its budgetary finances is such that Pakistan's own resources are only sufficient to pay for its debt servicing and defence. It is forced to borrow for other crucial needs such as running the state and paying for national development programmes. Clearly, this is a far from tenable position to take, especially in the medium to long term.
As for the idea of using Pakistan's so-called strategic position for seeking continued international financial support because it is located next to troubled Afghanistan and Iran, there could be no case than that of the collapsed Soviet Union to highlight the futility of this argument.
Russia — the inheritor of the Soviet might — has had to struggle endlessly before it began achieving relative stability. Other parts of the former Soviet empire such as the central Asian states continue to struggle for stability.
Without embracing reforms, Pakistan's fate may not necessarily be much different from that of some of the world's other major empires, eventually collapsing due to internal strife.
The leaders from Pakistan's political class who choose to oppose the RGST in the name of the people's interest must ask themselves a pertinent question — exactly how will Pakistan overcome the increasingly gnawing gap in its balance sheet as long as the country does not embrace a set of radical reforms?
The moment has now long passed to continue ducking the increasingly pertinent need for Pakistan to reform itself. Reforms are essential to keep pace with other countries which have comparable potential, but are galloping ahead at a much faster pace.
- Farhan Bokhari is a Pakistan-based commentator who writes on political and economic matters.
