Mr Omer Sailya, who is president of the All Pakistan Organisation of Small Traders and Cottage Industry (APOSTCI), is in a nasty mood. His furious denouncements are directed at the Central Board of Revenue, the Finance Ministry and the International Monetary Fund. He accuses them all of being “in cahoots with Western imperialism” to undermine Pakistan’s economy and society by enforcing a General Sales Tax on retail trade.
This is a self-serving tirade. The shopkeeper is not being asked to pay a penny of the proposed GST out of his own pocket. The GST is a Value-Added Tax on goods and services whose net burden – the difference between the amount of 15% GST paid by the shopkeeper on all purchases (imported or locally manufactured) minus the amount of 15% GST charged by the shopkeeper and received on all his sales from the consumer— falls on the final customer of goods or services. What is Mr Sailya’s problem then?
His problem is that he doesn’t want shopkeepers to keep and produce a record of all their purchases and sales – which will be required by the sales tax department in order to verify the right amount of net sales tax payable – because that would mean an open and shut case for the income tax department! In other words, once actual purchase and sale is recorded and known for GST purposes, the gross profit (which is the difference between the two) can be easily calculated and the scope for income tax evasion is significantly diminished. And that is why a retail GST is unacceptable to shopkeepers. They simply do not want to pay the full amount of income tax due.
This is a most inequitable status-quo. The vast salaried class pays its full burden of income tax because the employer deducts it from every salary and pays it to the government. Importers and manufacturers have also generally been dragged into the GST– Income Tax net. The landlord, too, may soon be expected to pay a land tax and income tax. Only half a million shopkeepers remain intransigent. If they could be persuaded to pay more income tax, the government would be richer by at least Rs 50 billion a year.
To Mr Sailya’s good fortune, most political parties, including the PPP, PML and JI, are backing him to the hilt. Indeed, the religious parties which have banded under the banner of the Milli Yakjheti Council in furtherance of their so-called 10-point “Islamic” agenda have gone out of their way to shower support on the traders. Meanwhile, the government seems unresolved about how to confront this mounting challenge to its writ.
The tacticians of the military regime thought they could neutralize the mullahs and protect their government’s flank by retreating over the proposed amendments to the procedures governing our blasphemy laws. But this has turned out to be a case of misplaced concreteness. Instead of being appeased, the mullahs are rampant. They are demanding more concessions – amongst other things, they want Friday to be the weekly holiday instead of Sunday and they want the Provisional Constitutional Order to include all the so-called “Islamic” provisions of the amended 1973 Constitution.
Of course, even a cursory glance at our political history by GHQ would have forewarned our Generals Know-All that whenever any government has conceded an inch to the mullahs, they have always come back to demand a yard. But Rawalpindi has been quick to announce reformist policies and quicker still to cancel them.
The mullahs will not rest until the state is subservient to them. Today they are unfairly targeting senior members of the cabinet as “secular agents of western imperialism”. Tomorrow they will go for the chief executive who has appointed such people. In fact, a stinging personal attack on General Pervez Musharraf has already been launched by Qazi Hussain Ahmad, prompting newspaper editors across the country to reach for their scissors and get rid of some of his more provocative remarks. What next? Will the generals abandon their announced reformist agenda because all the vested interests which have wrecked this country are threatening to gang up against them?
There are two principal contradictions in Pakistan’s make-up and everything else flows from them. The first contradiction relates to the sort of Islamic state we wish to be or become: one that is moderate and modern, espousing peaceful nation-state sovereignty; or the other that is extremist and orthodox, threatening violent extra-national jihads. We have to choose between these two models. Our choice should determine our attitude to the demands of vested interests. The second contradiction relates to our ability to become self-reliant and strong or remain dependent and weak. When every Pakistani pays his tax and corruption is rooted out, we will be a strong and self-reliant nation. When corruption is rampant and tax evaders threaten strikes, we will be weak and dependent on foreign powers and institutions for economic survival.
Hark, General Musharraf. All vested interests are paper tigers before a great reformer. If you stand and fight you will win. If you give in, you will have lost without a fight. Don’t give in if you want to rescue Quaid-e-Azam’s Pakistan.