It is the duty of righteous men to make war on all undeserved privilege, but one must not forget that this is a war without end.
-Primo Levi
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CONTENTS:
0 Speaking, editorially!
Another Budget with Macro-Miracles
0 Liberty & Wealth
By Tibor R. Machan
0 Freeing Trade with India
By Irfan Husain
0 Letters to FreePakistan
0 Letters from the Press
0 FreePakistan News Briefs
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DISCOVER YOUR POLITICAL LEANINGS! World's Smallest Political Quiz
Take the Quiz now and find out where you fit on the political map!
http://www.theadvocates.org/quiz.html
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What is Philosophy of Liberty? A screensaver by Lux Lucre and Ken Schoolland explains it.
Download and install it. http://www.free-market.net/rd/321907219.html ; http://www.jonathangullible.com
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ALTERNATE SOLUTIONS INSTITUTE PUBLISHES ITS FIRST BOOK OF TRANSLATION
Alternate Solutions Institute, Lahore, Pakistan, has published its first book of translation, Ken Schoolland's "The Adventures of Jonathan Gullible: A Free Market Odyssey," in Urdu which is understood not only in Pakistan but throughout South Asia. Ken's modern fable has so far been published in 29 languages of the world Urdu being the 30th. This book explains the principles of market economy in a simple manner and helps promote the concepts of open market and property rights. The book has been translated into Urdu by Khalil Ahmad. A. S. Institute is indebted to Irshad Ameen for his tireless efforts in getting the book out of the press.
It is hoped that the book will give a new direction to the discussion of welfare state in Pakistan.
If you want to purchase the book, contact us
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HOW TO END ALL WARS FOREVER
Aslam Effendi, an old and unsung Libertarian of Pakistan, has written three books on free market philosophy: HOW TO END ALL WARS FOREVER, HARD FACTS OF HISTORY, and, ECONOMICS FOR THE CONFUSED. When no publisher agreed to invest in the project, he spent out of his own pocket to get HOW TO END ALL WARS FOREVER printed. But, for want of a distributor, this book which has been praised as a classic remained dumped and could not find its way to the market. For details, read ‘Aslam Effendi: A Free Marketeer in Pakistan’
or visit http://asinstitute.org/articles.php. Alternate Solutions Institute, Lahore, Pakistan, has purchase all the copies of the book from Aslam Effendi to make it available to the right persons and to compensate the author as well.
If you want to purchase the book, contact at asinstitute@hotmail.com ; khalilkf@hotmail.com
A. S. Institute intends to publish all of his books; if you are interested in this project, please contact at the above-given email addresses.
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FREE MARKET THINK TANK OFFERS $10,000 FOR BEST ARTICLES
The International Policy Network (IPN), a London based free market think tank, is offering a $10,000 prize to writers anywhere in the world whose published articles work to promote the institutions of a free society – free speech, property rights, the rule of law, free markets and sound science.
The Bastiat Prize for Journalism, first held in 2002, is inspired by the 19th century French philosopher Frédéric Bastiat and his compelling belief in free trade and the defence of liberty. Bastiat's brilliant use of satire enabled him to turn even the most complex of economic issues into a tale to which the average person could relate. In keeping with this legacy, prize entries are judged according to the intellectual content of each article, the persuasiveness of the language used and the type of publication in which they appeared.
Last year the competition attracted over 140 entrants from 28 countries across the developed and the developing world: writers came from China, Zimbabwe, Pakistan, Israel, UK, Sweden, Australia and the US.
Entries will be accepted between now and June 30th 2004 and must be in English. They can be in the form of one or more published articles totalling no more than 4,500 words inclusive.
Rules, regulations, judging criteria and previous entries can be found on IPN’s website: www.policynetwork.net
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SPEAKING, EDITORIALLY!
ANOTHER BUDGET WITH MACRO-MIRACLES
On June 12, 2004, the Federal Finance Minister announced the budget for 2004-05 in the National Assembly. Listening to his budget speech was an interesting experience. He boasted of his governments’ macro-achievements made last year; and projected the same to be made through this years’ budget proposals. But, people now have come to know and say bluntly that macro-figures do not match their actual conditions. At one point, he suggested that there were classes who remain deprived of the fruits of market economy, and he would propose some sort of relief meausres for them. Smilingly, I thought which were these classes? Surely, they are not the poor people ‘living on the government dole’ as the Finance Minister would imagine; in fact, these classes include bureaucracy, politicians, and rent-seekers that live on the government ‘welfare.’ It is these classes who produce no goods or services and market economy does not cater to them. Whereas poor people are the real entrepreneurs and producers; they live and work in the market and it is their share of the fruit of the market economy (their hard earned income extorted as tax money) these classes live on. So, using the tax proposals as a signpost, the budget can easily be analyzed and seen whether it is people friendly or not. {Khalil Ahmad}
LIBERTY & WEALTH
By Tibor R. Machan
[Tibor Machan is a professor of business ethics and Western Civilization at Chapman University in Orange, California, USA, and author of "Putting Humans First" (Rowman & Littlefield). He advises Freedom Communications, parent company of Freedom News Service. We are grateful to him for allowing us to reproduce this article here.]
Over the years, as I have argued for the free society and its political-philosophical base, libertarianism, quite often I have been confronted with the charge that all I am doing is rationalizing the welfare of the rich. I am by no means the first to face this charge—classical liberal defenders of the free society and its free market have often been regarded as mere apologists for the wealthy. Karl Marx was notorious in his dismissal of Adam Smith for this, as has been the Canadian neo-Marxist C. B. Mcpherson. There are many others and they have spawned a legion of epigone who repeat the idea.
Aside from the fact that hardly any libertarians I have ever known are wealthy—there are a few, and good for them—this charge is very ill conceived. It assumes that one can dismiss an idea simply by associating it with certain unpopular motives. In this case the motive that’s involved is seeking to prosper, the profit motive, in other words. Yet nothing at all follows about the merits of an idea from showing that someone proposed it because it might make him rich. The idea could be a good one—and often this is just what goes on when inventors of useful gadgets propose their ideas. It is good, can make them rich, and that’s why they propose it. It would be strange if the idea’s merits depended on the proponents' disinterest in it.
But there is something else very wrong about dismissing the case for freedom on the grounds that some people who support it also wish to be rich—pursue profit while enjoying their liberty. Consider that most journalists support freedom of the press. OK, so such freedom will benefit them a lot—they will have jobs, will be able to report what they deem worthy of reportage, and so forth. Does any of that lessen the importance of the freedom of the press? Clearly not.
And then there are all those other liberties, such as freedom of religion, artistic freedom, political freedom and so forth. All these leave those who possess it free to pursue their object—religion, art, political involvement, etc. Does any of that diminish the worth of the freedom these folks champion? Again, not at all.
Simple fact is that anyone with any kind of goal he or she deems worthy of pursuit will also champion the liberty to pursue that goal. So what really must be annoying the challengers of the free society who complain that it makes the pursuit of wealth possible is, well, the pursuit of wealth. But why? Why don’t they complain about, say, the pursuit of health? Or beauty? Or organic farming? Or dentistry?
The answer, I think, is that the pursuit of wealth is so brazenly, unabashedly and unapologetically self-enhancing that many people, who wish to come off as urging us all to be saviors of humanity, altruists to the core, just cannot stomach it. Of course, people who pursue good health, fitness, a career in the arts or any other profession they wish to be free to pursue, are no less involved in self-enhancement. Despite what some of them say—namely, that they are in it only to be of service to others—many actually find their pursuits quite self-satisfying. Even Mother Teresa is reported to have confessed that she loves being of help to the needy, thus not doing it for the pain but, at least in part, for the pleasure of it all.
Another thing that probably explains the hostility toward the pursuit of wealth is that wealth makes possible choosing from among many alternatives—one can keep it, give it away, leave it to a favorite charity or cause, squander it, etc. Wealth provides one with options and many people really seem to hate it that the wealthy might be free to choose the goals which their wealth will promote. Instead, they would love to be able to dictate to the wealthy what goals they ought to advance—it is just so awful that the likes of Bill Gates, Warren Buffet, and the rest get to decide that millions, even billions, will be devoted to something the critics have no say about.
So, perhaps the ulterior motive behind criticizing libertarians for helping along the pursuit of wealth should be examined—it may well be wishing to control people, coerce them to support what the critic likes instead of what the wealthy person likes. Then it no longer looks so noble to criticize liberty and its champions, does it?
FREEING TRADE WITH INDIA
By Irfan Husain
Over the years, I have been accused of excessive optimism in the face of harsh realities as I consistently argued for peace between India and Pakistan. One reason for this Pollyanna approach is that I have been convinced that without peace, there can be little meaningful development in the two countries, home to some of the poorest people on this planet.
With the vast expenditures diverted to defence, the two governments have little left over for investments in the physical and social infrastructure. And with the constant threat of war hanging over the subcontinent, there has been far less foreign investment coming in than a peaceful region would have attracted.
Although India has done far better than Pakistan in both these areas, its huge population has meant that millions of Indians are still living in abject poverty. Indeed, this is the very constituency that voted the BJP government out and took the shine off the economic gloss.
Now that both governments are committed to talks over the entire spectrum of bilateral issues including Kashmir, it is tempting to look forward to a scenario where normality finally prevails along the Indo-Pak border.
But first, for those to whom the concept of friendly relations between the two feuding nations is strange, here is a bit of historic trivia to put things into context: in 1948-49, 56 per cent of all of Pakistani exports were destined for India, while 32 per cent of all our imports came from our neighbour.
This bilateral trade fell to a trickle in the fifties as relations deteriorated, but these figures give an indication of the volume of goods that once crossed the border.
Currently, informal trade (a euphemism for smuggling and goods carried in both directions as personal baggage) as well as trade through third countries far outweighs the formal trade which was only $293 million a couple of years ago.
Out of this figure, Pakistan's exports amounted to a paltry $55 million while India exported $238 million worth of goods and services to us. Clearly, there is no other direction these tiny amounts can go but up.
But small as they are, many decision-makers in Islamabad believe that the imbalance in trade they reflect would only be multiplied several times over if trade is opened up.
So what if it does? As it is, Pakistan has consistently posted negative trade balances with most of its principal trading partners. Buying goods from India instead of importing them from Japan or the West would mean a far better deal for Pakistani consumers as both production and transport costs would be lower.
But the long-term scenario for Indo-Pak trade is not so one-sided, according to many Pakistani businessmen and economists. Just because relations have been so abnormal over the years, no trade pattern has had the time and stability to evolve.
Businessmen and entrepreneurs on both sides have not yet had the opportunity to take stock of prospects and explore the many possibilities. Investment decisions need time and a thorough knowledge of the markets and the ground rules. Above all, especially in our context, entrepreneurs need to develop personal as well as institutional contacts.
Obviously, free trade between India and Pakistan would mean severe dislocations for many industries, and some of the less efficient ones would go to the wall. But this kind of shake-out happens when competition is severe: witness the jolt our engineering sector received when cheap Chinese products flooded our markets.
But sink or swim is the name of the free-trade game. The more efficient Pakistani units will thrive by having a bigger market, while inefficient ones might have to shut down if they cannot swiftly restructure their operations.
There will be opportunities and pitfalls aplenty in a suddenly expanded market, and the race will go to the flexible and the innovative. The consumers will benefit from greater choice and lower prices.
In the short term, Pakistani manufacturers will be at a disadvantage as their Indian competitors will benefit from economies of scale as they already serve a huge market. In the capital goods sector, India will be at a considerable advantage as over the years, Pakistan has tended to import heavy machinery rather than manufacturing it locally.
But in the energy sector, Pakistan stands to profit from gas pipelines from Iran and Central Asia to India. Apart from the transit fees which will exceed a billion dollars a year, we would be able to buy gas at cheaper rates than we are currently paying for indigenous natural gas.
For those who think that we can't compete, PIA is a success story worth examining. When Pakistan declared an open-skies policy a decade ago, the national airline's weaknesses were exposed as foreign operators took a sizable chunk of its market share.
Its high operating costs caused by over-staffing meant that it could not slash fares without incurring losses. Its ageing fleet and shambolic management were all symptoms of the archaic controls exercised by the state in what should have been a purely commercial enterprise.
But since a professional chief executive was inducted and given greater powers and freedom to operate, the airline has been turned around. It is now profitable, and in the midst of a major fleet renewal programme.
As we contemplate competing with India in the boardrooms instead of the battlefield, we should not imagine that all of Indian industry is at the cutting edge: fortunately for us, much of it is pretty inefficient, and the large state sector continues to be a drag on its economy.
Once trade builds up momentum and entrepreneurs develop confidence in the peace process, we will find mergers and acquisitions taking place that will integrate the two economies over time. These vested interests will build up powerful constituencies for peace that will prevent politicians from dragging the two countries back to the brink.
Trade between the two traditional foes will act as a powerful engine for the entire SAARC region. Currently, Pakistan imports only two per cent of its total import bill of $12 billion from its regional partners.
Once trade and travel are normalized, tourism will receive a powerful boost, generating employment in remote regions. India is already a major force in this sector, and its burgeoning middle class would come across in large numbers.
They are already the largest group of tourists visiting Sri Lanka; many of them have been waiting to visit Pakistan for sentimental reasons. Large Indian hotel chains would want to invest in properties in Pakistan.
Free trade between India and Pakistan is a win-win situation for the people, entrepreneurs and governments. Let us not allow negotiators to drag their feet on the way to peace and prosperity.
[Courtesy Dawn]
Letters to FreePakistan
Another excellent newsletter! I’ll print the article on child labor for my students.
Would you be interested in my speech on immigration? I'll pass it to you for a look. If you are interested in this, I can send you the pictures I used. If you want to use the footnotes, I need to make changes to the numbering and other adjustments that I have not yet made.
Ken Schoolland [Hawaii, USA]
. . . , excellent article (Buying a Car in Pakistan). I'll be using this in my international trade class.
Ken Shoolland
An excellent piece (Buying a Car in Pakistan). I've passed it on to Sunni at Free-Market.net. Incidentally, in the future if you would like to see your articles reach a wider international audience, just contact Sunni and give her the url for the article. Identify yourself as ISIL's rep in Pakistan. sunni@free-market.net
And have you received the current issue of the "Freedom Network News" yet? If not, it is on-line at the ISIL website: http://www.isil.org The piece about your founding the Alternate Solutions Institute -- and a piece on the Urdu version of JG is there. Check it out if you already haven't.
Hope you are well and prospering.
Best . . . Vince Milller
Letters from the Press
'TWENTY-TWO FAMILIES'
[Mohammed Aziz Haji Dossa, Karachi]
With reference to the Islamabad Diary of Ayaz Amir (May 28), I could not agree with him less in his depiction of the "twenty-two families as the industrial mafia" representative of the 10 years of the Ayub era.
Far from being carpetbaggers, the 22 families came from all reaches of the globe at the behest of founder Mohammad Ali Jinnah to build a commercial and industrial base for Pakistan, and pioneered industries in the then nascent wastelands like SITE and provided, above all, employment.
Professor Khadija Mahbub-ul-Haq made the compilation of 22 families while she was teaching economics at the Government College, Lahore. On March 25, 1969, General Yahya eased Ayub out, and Dr Khadija's husband, Dr Mahbub-ul-Haq, had the nomenclature of 22 families printed in The Pakistan Times that was later carried in Newsweek.
Prime minister Zulfikar Ali Bhutto and his finance minister Mubashir Hassan had only disdain for the 22 families because the latter were not sons of the soil and used them as whipping horses. Bhutto's three nationalization ordinances of 1971, 1973 and 1976 broke the back, undid with a single stroke the 22 families.
The Chinese adage "great fortunes know no third generation" was fulfilled in the downfall of the 22 in the '70s. July 4, 1977, marked the exit of Bhutto and the emergence of the Zia regime.
To restore the lost confidence of the business community which was fast abandoning Pakistan for securer Middle Eastern and western shores, draining the nation of entrepreneurial expertise, Zia's minister of production, General Habibullah, had cotton, ginning factories, oil crushing mills, rice mills and flour mills denationalized that were taken away by Bhutto on July 17, 1976.
Ahmed H.A. Dada, then president of the Karachi Stock Exchange, hosted a reception for General Habibullah at Beach Luxury Hotel, Karachi. In his address Habibullah categorically stated that the 22 families had made Pakistan and turned the nation into a bastion by planting the seed of industrialization.
The 22 families made sacrifices when they opted for Pakistan and decided to join with Mr Jinnah in building a separate homeland for the Muslims of the subcontinent. Numerous institutions all over Pakistan - schools, colleges, hospitals, orphanages - owe their endowments to the 22 families.
It is wrong therefore of Mr Ayaz Amir to castigate the 22 families as some kind of a mafia, beholden to their godfather, President Ayub, and his very clever, pragmatic finance ministers, Mohammad Shoaib and N. M. Uqaili. [Dawn]
[Here is what Ayaz Amir wrote in his column about the 22 families: “The discontent of the Ayub years was summed up by that evocative phrase "22 families": the industrial mafia in whose hands, it was said, national wealth was concentrated. Fairly or unfairly, what the 22 families stood for then, defence housing colonies stand for now.”]
BLACK MARKETING OF CARS
[Bushra Syed, Islamabad]
This is in reference to a meeting of the Senate standing committee on production and industries on May 11. The committee recommended to the government to allow import of used cars, decrease prices of local automobiles and a reduction in advance payments demanded by car manufacturers aimed at protecting the interest of thousands of consumers.
Despite the lapse of one month, no action has been taken by the government to save the people from the scourge of black marketing. On top of this, an automobile manufacture company has quietly increased its prices by Rs20, 000, while the government drags its feet over the cabinet's decisions taken earlier this year.
The Senate committee had genuinely reflected the aspirations of the consumers who are forced to buy locally-assembled cars from the black market by paying an extra 10 percent over and above the going market rate.
The government has paid mere lip service on these issues and has done nothing to stop car manufacturers from charging premium. It seems that black market is in fact being encouraged or patronized by the government through its delaying tactics. Committee after committee is constituted to delay the implementation of the prime minister's orders.
On Feb 11, the federal cabinet decided to allow the import of re-conditioned cars besides allowing a reduction in import duty on small engine cars, completely-knocked down (CKD) kits and completely-built units (CBU). But the car manufacturers' lobby has effectively blocked the implementation of the prime ministers' decisions. Why is the government not doing anything when it is very simple to do so?
Car manufacturers have suggested that only one car should be booked per National Identity Card and the car be registered in the name of the person who booked the car. This will effectively deter speculations.
There is no shortage of cars if consumers pay 10 per cent or more as premium. The demand-supply gap is artificial and the government has turned a blind eye to it - who knows how many palms have been greased.
[Dawn]
MONOPOLY OF CAR ASSEMBLERS?
[Nasir Latif Butt, Karachi]
It has been more than two decades since the government allowed local entrepreneurs to assemble CKD/CBU cars and market them at a price fixed by them. There was a clause about deletion with locally- produced parts - a dream yet to be fulfilled.
Back in the late '90s when the dollar started to go up the assemblers started crying and increased the prices arbitrarily. When after the new government took over and the dollar came down, they did not reduce the price.
As yet we don't have any choice but to buy their product. Recently there was a story by the assemblers going around that they have invested Rs20 billion plus and if any step taken to reduce duty on new cars or reconditioned cars would cost them heavily and also lead to unemployment.
But during the last financial year they earned billions and kept more than Rs 50 billion of public money in their coffers without interest in the name of delivering cars after 12-18 months. The losers are the people. Now let us see how car assemblers are wasting the easily-earned money.
Why should the government not stick to the agreement made with the car assemblers when giving permission to set up their units and why should they continue to extend the deadline for the deletion programme? Imports should be liberalized and healthy competition encouraged. [Dawn]
WTO CHALLENGES
[Shakir H Shamim, Islamabad]
World Trade Organisation will be knocking at the door in 2005. We will have to face a number of challenges to compete with other countries as WTO will bring free trade culture in the world. In order to compete with other countries there is need to cut overhead charges, introduce quality control and ample supply of goods to markets. In order to face the challenges we will have to take prudent measures to reduce charges of electricity, gas, cut down on taxes so that prices of our products could be reasonable and can compete international price structure and quality control. In this regard a comprehensive strategy is required to be developed with coordination of multi-agencies and government of Pakistan well in time so that our nation could be in position to face the challenges in a befitting manner. [The News]
ECNEC APATHY
[Shakeel Akhtar, Rawalpindi]
It is disgusting and shocking to learn that the ECNEC has approved construction of a monument in Islamabad at a cost of Rs. 427.698 million. So, this is the type of top economists we have in our country who have no consideration for survival needs of about 40 percent Pakistanis living below poverty line, and, like Pharaohs, consider monuments or such luxurious projects in Islamabad essential to be built with blood and tears of the poor taxpayers.
It is our misfortune that the president and the prime minister have given a free hand to the two imported IMF representatives to manage our financial resources and economy as they wish, and our elected parliamentarians are either incompetent or not interested in taxing their brains in financial and encomia management except that which suit their personal financial and other gains. I wonder if anyone at the top is worried about waste of tax money in a debt-ridden poor country. [The News]
MY LORDS CONCERNS
[Farooq Zaman]
While addressing a seminar in Islamabad recently, the chief justice of the Supreme Court regretted that the people had lost confidence in the Judiciary because of delayed Justice.
Is this, my Lord, the only reason? [The News]
ACHIEVEMENTS
[SMF Hasan, Lahore]
The finance ministry, through large-size advertisements, in national newspapers, is eulogising its achievements in national economy during 2003-04. It displays a foreign reserve of 12.5 billion dollars, 254 billion advances by banks to private sector, exports up from 11.2 billion to 12 billion and increase in revenue collection by 13 per cent.
Actually, the foreign reserve accumulated due to spate of remittances from expatriates afraid of penal action in foreign countries, grant of 1.5 billion dollars by USA for logistic support in Afghanistan and rescheduling of debts. With the decrease in foreign remittances, the reserve has remained static during the current year.
The finance minister knows fully well that 90 percent of advances by banks have been taken by borrowers to retire their earlier loans taken on much higher rates of interest. Consequently, banks have suffered huge losses, forcing them to reduce the return to depositors from 9 to 1 percent with all its pernicious effect.
The export shows a meagre increase of 7 percent that is insignificant in view of normal fluctuations in prices of essential commodities in international market. Similarly, in case in revenue by 13 percent compares unfavourably with 15 per cent increase during 1993-99, according to State Bank annual reports without harassing the business community, particularly when GST and withholding tax were not universally imposed.
The faulty performance of economy would continue as long as foreign interests controlled it. The Parliament must, therefore, seek liberation of national economy from foreign controllers before claiming liberation of democracy from native rulers. [The News]
BUREAUCRATIC INDIFFERENCE
[Saad Usman, Karachi]
If someone asked what was the cost of being a law-abiding citizen of Pakistan, a common response would be constant mental agony at the hands of our ruling bureaucracy. Recently, I accompanied my company lawyer to attend the hearing of a case before the customs appellate tribunal where I realized how indifferent one could be towards the needs of the helpless taxpayers.
Not only that the tribunal assembled late, the representative of the sales tax department did not bother to turn up. Cumulatively, the precious time of around 50 people (lawyers and representatives of various companies) was wasted without any tangible result.
The lawyer of one of the companies objected when given the next hearing date that his case was being adjourned for the 35th time for one reason or the other.
How can a country progress where people are generally indifferent towards the importance of being on time, be it in government departments, be it in the judiciary or be it at wedding ceremonies? [Dawn]
LOCAL CALL DURATION
[Arshad Karim, Karachi]
Reference letter by Mr. Ather Javed Sufi, the PTCL Media Coordinator (June 3) captioned ‘Local Call Duration.’
Mr. Sufi says that the PTCL welcomes the suggestions from its valued customers. Yes, the government is always pleased to accept suggestions only to be thrown away in the dustbins. Everything done by our government is always done ‘in the best interests of its people,’ but unfortunately, the best interest never matches with that of the common man. This is ridiculous to say that the PTCL introduced time metering on local calls purely for the convenience of its customers. The fact is that this was found to be the easiest way of making huge profits.
I fail to understand why we make comparison with other countries. Mr. Sufi has mentioned that in countries where local calls are free, the line rent is high. (As if the line rent is very low in Pakistan). This is a very unrealistic approach. Does he know what is the earning power in those countries? Is it as low as it is in Pakistan? This is like a doctor practicing in Lalukhet and charging fee of a doctor in New York. Whatever we do, must be made affordable for the common man. May I add here that during the first two decades, local calls used to be absolutely free in Pakistan. Why can’t this be done even now?
The PTCL is making huge profits and it will be highly appropriate for it to do away with at least multi-metering of local calls. This is a great burden on the man with limited means. Don’t forget we are very poor people. [The News]
TV LICENCE
[Imran Rao, Sahiwal]
One can only wonder why PTV posts millions in losses when there is so much advertising on its channels. There should be an inquiry into where the money is going. In the forthcoming budget, the finance minister should also do away with TV licence fees as this is both unfair and illogical.
Many viewers watch TV through cable and they pay their operator a fees on which there is a government levy. Then, if TV licences are to be paid, we should be given the privilege of advertisement-free viewing, which is not the case here. The TV licence is only a nuisance and is used by many TV inspectors to harass the common man. [Dawn]
TAMPERING WITH FORMULÆ
[S.M.F. Hasan, Lahore]
It is leant that to hide their utter failure in all sectors of national economy, particularly the easily verifiable agriculture and industry, the finance minister and his close advisers are quietly revising the long established and standard formulæ, determining the growth of GDP, inflation, per capita income and poverty. For example, at present the per capita income in Pakistan is 417 dollars, lowest in its history. Under the revised formula, it would soar to 600 dollars. Similarly, poverty that was 18 per cent till 1997-98, and is 44 per cent now, would be shown as 32 per cent. Federal Bureau of Statistics is being forced to declare inflation as 4 per cent, though last week it had notified increase in prices of essential commodities for all as 11 per cent and for poor class of people as 13 per cent during the current year.
The growth of GDP at 6 per cent is also being claimed under the revised formula to dupe the unwary president, prime minister and the people.
The country’s Bar Council should immediately file a petition before the competent court and some patriotic member of Parliament move an adjournment motion to restrain the finance minister from tampering with the existing formulæ and to assess his performance only under the existing formulæ. [The News]
A TAXPAYER'S ORDEAL
[Shireen Adil, Karachi]
For some reason unknown to me, the government asked me to pay my annual income tax in advance of the tax submission dates in July 2004. Understanding that my government must be needing the money, although we keep hearing of economic growth, I complied and raised the required funds.
Wanting to pay up immediately, I went to the National Bank branch in Clifton, only to find that the cashier had not come that day, so no tax could be paid. I enquired about who else could possibly take the money but only got one response: "Try tomorrow." I looked for the bank manager high and low, but he was "not in his seat".
I reached the National Bank at 9am the following day so as to avoid long queues. Others, who were already waiting for the cashier's window to open, and I were informed by a guard that it would take some time before the window opens.
I went to the manager who informed me that they were not able to open the vaults of the bank due insurance reasons. He refused to accept my request to put up a sign outside the bank, informing customers that they should not come to the bank before 9.30am as the bank would not be able to serve them.
I did manage to pay my tax that day, but am, once again, left baffled about the value we have for time - our own and that of others. It is when we begin to admit to ourselves that we ought to respect time that we be aware of our abuse of it. Otherwise, we will continue to remain in denial. [Dawn]
FUDGING OF ECONOMIC DATA
[Zarghon Shah, Rawalpindi]
The financial position of the country has improved in the recent years. It may be attributed to the faithful implementation of the international financial institutions (IFIs) formulated policies, higher remittances, debt re-scheduling and grants provided by the friendly countries after 9/11.
However, growth, poverty, income distribution, employment and social indicators have deteriorated. The realities on the ground support this dismal situation. Nevertheless, the economic managers just to please their political leaders are providing fabricated figures on growth, poverty and social indicators to the public.
This leads to faulty economic planning on one hand, artificial sense of pride regarding socio-economic well being on other hand. And this results in total breakdown of the system of economic management and is a source of disillusionment of the public towards their leaders.
Providers of incorrect data and information should be treated sternly and punished, instead of rewarding them with high positions and status in the bureaucratic set up of the country.
One instance is the churning out of incorrect socio-economic data by the country’s Statistics Division, while the Federal Bureau of Statistic (FBS) is reported to be in total disarray. [The News]
POWERS OF TAX OMBUDSMAN
[Taxpayer, Karachi]
This has reference to the letter "Powers of tax ombudsman" by Mr Chaman Lal Oad (May 27). Mr Oad's speaks just as a taxation officer would reply to a taxpayer when the taxpayer is crying hoarse for justice.
I would like to ask six questions from Mr Oad regarding his letter: First, the institution of FTO having been created in 2000, how did it take more than three years for the CBR to get clarified or "corrected" the jurisdiction of the FTO from the president, especially when the FTO had by this time disposed of about 4,000 complaints - which is on record?
Second, FTO Saleem Akhtar is an ex-judge of the Supreme Court and has adjudged numerous cases of tax disputes. Did he need this clarification? Or was he unclear about his jurisdiction for about three years after taking charge?
Third, about 90 per cent of the differences that arise between the department and the taxpayer are with respect to the substantive provisions of the Income Tax Ordinance.
If these substantive provisions are taken out from the jurisdiction of the FTO, then is there any sense in portraying an image of the FTO as a body that has been created to look into the "mal-administration" of the department?
Fourth, Mr Oad has not detailed any "procedural deviations" which fall in the jurisdiction of the FTO and as to why the CBR has not issued any circular as to what specifically constitutes the jurisdiction of the FTO, to make the issue of jurisdiction clear and transparent for everyone.
Fifth, as compared with going through the grooves of CIT appeals, tribunal and high court, on the one side, and going through one-window redressal of the FTO, on the other, which is more economical and quick?
Sixth, is it just and proper that the highest executive should pronounce a favourable judgment on the summary of another executive body without an iota of taxpayers' participation or representation? After all, it is the taxpayers who pay the taxes.
Has the institution of the FTO been created for the department or the taxpayers? Sadly, this country has no culture of taking into account the aspirations of the ruled. [Dawn]
UNEMPLOYMENT
[Iftikhar Hussain, Islamabad]
This is with reference to the Sqn Ldr(r) Tarique Mahmud Malik’s letter titled ‘Unemployed and poor’. (The News, May 30, 2004). According to the definition of unemployment "the person who does not have the job commensurate to his ability, qualification and experience, is called unemployed." Keeping in view the definition, the situation of unemployment is worse and even awful and unemployment rate stands manifold above of 8.3 percent. One of my colleagues having MBA (Finance) is working as a waiter and many others as clerks with masters. How can one judge them as employed? [The News]
WASTAGE OF PUBLIC FUNDS
[Asif Jah, Karachi]
This refers to a photograph in the May 28 issue of Dawn Karachi Metropolitan, which shows Habib Ibrahim Rahimtoola Road being constructed anew. The road was in a good condition and comparable to Sharae Faisal.
There was no need to waste scarce city government funds on it while many other main roads in the older part of the city are in a shambles. For example, the main road in Shershah which carries heavy traffic from SITE to the seaport has foot-deep potholes and ditches and has not been repaired for the last many years. Vehicles get stuck in these ditches daily, causing massive traffic jams.
It seems the only reason for re-laying of Habib Ibrahim Rahimtoola Road is that it is a VIP route and there are high-profile defence establishments located on it. The city government is requested to judiciously use the taxpayer's money. [Dawn]
ECONOMIC PREDICTION
[Abro Shoukat Ali, Usta Muhammad]
In his article "Has Pakistan begun to shine?" (Economic and Business Review, May 17), Mr Asad Ali Shah says the robust growth in GDP achieved during the current financial year has had little impact on employment and poverty reduction.
If this is true and the trend persists, then one can foresee trouble in the near future, affecting almost every sector of the economy. Banks' resorting to consumer financing after failing to find avenues in corporate financing may lead to severe contractionary trends in the economy.
Consumers having relatively fixed incomes in the short run, when obliged to pay back their loan instalments, will have to cut their spending and such a leakage in consumption may trigger a backward multiplier effect leading to another recession. [Dawn]
HANDS-FREE SETS
[Menin Rodrigues, Karachi]
Reference the news report titled 'People using mobile phone while driving to be fined' (May 28), it is suggested to the home department to consider three factors, the safety of people using phones while driving and the freedom to communicate. It is important to be able to remain in touch when the city is in turmoil.
The home department is advised to initiate a public debate on this important amendment to the Provincial Motor Vehicle Ordinance 1965 before its promulgation.
The standard practice is to allow drivers to use hands-free sets while driving. It minimizes one's lack of concentration besides enabling him/her to communicate safely and freely.
Seat belts are more important but unfortunately most of the vehicles that ply on our roads have no belts. Let some organization do a study on this too before coming to any conclusion. [Dawn]
FreePakistan News-Briefs
HIGHLIGHTS OF THE BUDGET 2004-05
* The total outlay of the budget is Rs.902.7 billion with Rs.700.7 billion current and Rs.202 billion development expenditure with a deficit of Rs.199 billion.
* The tax revenue target is placed at Rs.580 billion including Rs.181.9 billion for direct taxes, Rs.103.2 billion for customs duty, Rs.249.2 billion for sales tax and Rs.45.7 billion for excise duty.
* The collection of surcharges on petroleum and gas is projected to be Rs.62.5 billion.
* External resources for the budget are Rs.156.4 billion with 19.2 billion expected budgetary grants and no Saudi Oil Facility.
* The basic threshold of income liable to tax has been increased from Rs.80, 000 to Rs.100, 000.
* For the effective enforcement and collection of TV license fee, the government has proposed its collection at a rate of Rs.25 per month through electricity bills.
* The turnover tax scheme for small and medium enterprises is being abolished and exemption threshold for application of sale tax is being raised from Rs.0.5 million to Rs.5 million, a 10 fold increase for both manufacturers and retailers. In addition, it is proposed to allow registered retailers having turnover in access of Rs.5 million per annum to pay sales tax on the basis of 15% value addition.
* The budget statement shows about 50% of the current expenditure have been booked under the classification chart of accounts for the Executive and Legislature Organs (General Public Services), which includes Rs.42.5 billion for superannuation allowances and pension, Rs.44 billion for servicing external debt, Rs.51 billion for repayment of foreign loans and Rs.170.2 billion to service domestic debt besides other items.
* The defense expenditure for 2004-05 will be a record Rs.194 billion with an increase of around 3% in real terms compared to the outgoing financial year’s revised defense budget of Rs.180.54 billion.
* About Rs.15.1 billion has been allocated for public order and safety affairs.
* Rs.202 billion has been allocated for the Public Sector Development Project program with an aim to reduce poverty, ensuring good governance, generating employment and raising the quality of social services.
* 5% withholding tax has been imposed on advertisements of TV channels operating from abroad.
* Withholding tax on the income from prize bonds, winnings and prizes and lotteries has been increased from 10 to 20 %.
* Tractors and export industry of motor vehicles including motorcycles and bicycles has been offered a package of tax and duty exemption on import of materials.
* The budgetary allocations for the top two offices – the presidency and the prime minister secretariat - and that of the corruption “targeting” NAB (National Accountability Bureau) and the NRB (National Reconstruction Bureau) have been increased for the year 2004-05 against 2003-04.
* Last year the PM secretariat was allocated Rs.190 million but it spent Rs.263.2 million. For the year 2004-05 it has been allocated Rs.226.5 million.
* In case of President Secretariat, the budget allocation for the last year was Rs.185.7 million but it spent Rs.186.6 million. For the year 2004-05, it has got raised budgetary allocation of Rs.212 million.
* The government has officially formalized the role police and armed forces under the Sales Tax Act. The Finance Bill 2004 has proposed new provisions, clause 5(32), for providing assistance to the Sales Tax Officer by officers of civil and armed forces.
* The proposed budgetary cut can bring import duty down from the previous 150% to 100%.
PRIVATE ROCKET WILL TRY AND REACH SPACE
MOJAVE, Calif. (AP) - A privately developed manned rocket will attempt to reach space this month, its builders said last week. It would be the first non-governmental flight to leave Earth's atmosphere. SpaceShipOne, created by aviation designer Burt Rutan and funded by billionaire Paul Allen, will attempt to reach an altitude of 62 miles on a suborbital flight over the Mojave Desert on June 21.
GOV TO INTRODUCE FISCAL RESPONSIBILITY BILL
The Federal Finance Minister has announced to introduce a bill ‘fiscal responsibility law’ that would that would limit the extent of the government borrowing in future.
NO DUTY ON CARS FOR PRIVILEGED PERSONS
The government has exempted payment of duty and taxes on cars purchased for diplomatic representatives or missions or privileged persons, organizations, offices and agencies.
MINISTER UNHAPPY WITH QUALITY OF CARS
The Federal Minister for Industries and Production has taken note of quality of locally assembled cars and directed the Engineering Development Board to ask the assemblers to improve the quality of cars to international standards.
PTCL PRIVATIZATION PLAN TO BE IMPLEMENTED
The Federal Minister for Telecommunication and Information Technology has said that plan for the privatization of PTCL would be implemented in July 2004.
CVT’S FUNDAMENTAL FLAW MAULS KARACHI BOURSE
The fundamental flaw in the proposed Capital Value Tax mauled on June 14, 2004, the Karachi bourse where capitalization of Rs.44 billion in panic selling hammered down the Karachi Stock Exchange index by 166.91 points compared with the intra-day low at 218 points. Referring to the fundamental in the CVT, one research analyst said, “The tax will act as a turnover tax on the purchase of shares and is negative for investment in general.”
BIDS FOR LANDLINE PHONE OPERATIONS
Over 90 local and foreign firms have finally applied for landline telephone operations licenses – with the Indian telecom giant Reliance Technologies being one the frontrunners – the first Indian company poised to enter Pakistan’s deregulated telecom sector.
PAKISTAN REJECTS PRIVATE INDIAN AIRLINES
Two private Indian airlines seeking permission to launch commercial flights to Pakistan have been refused by its government. The unnamed Indian aviation officials were quoted as saying Pakistan prefers to increase the frequency of existing flights by state-run Indian Airlines and Pakistan International Airlines.
BANKS TO REPORT SUSPICIOUS TRANSACTIONS
The Banking Policy Department of State Bank of Pakistan has directed commercial banks “to report all suspicious financial transactions to the director general Anti-Narcotics Force.”
INDEPENDENT REVENUE JUDICIAL SERVICE PROPOSED
The Federal Tax Ombudsman has proposed to the Federal Minister for Finance to create an independent Revenue Judicial Service that should be completely independent of Central Board of Revenue (CBR).
PRIVATE SCHOOLS PROTEST AGAINST COMMERCIAL FEE
The private schools have protested against the imposition of heavy commercial annual fee by Lahore Development Authority (LDA) and City Corporation.
ADB CRITICIZES AUDITOR-GENERAL OF PAKISTAN
The Asian Development Bank has criticized the Auditor-General of Pakistan for not submitting dozens of audit reports for fiscal year 2002-03 containing “financial irregularities” in foreign funded projects in the country.
RS.5 BILLION SUBSIDY ON IMPORTED WHEAT
The federal government has assured Sindh and NWFP that it will provide subsidy worth Rs.5 billion for one million tons imported wheat.
ENVIRONMENTALISM TO BE ADDED TO THE CURRICULUM
The government of the Punjab province has decided to include the concept of environment in the curriculum of public sector schools.
SBP ALLOWS ACCOUNTS TO ALIENS
The State Bank of Pakistan has allowed aliens registered with the National Aliens Registration Authority (NARA) to open bank accounts.
LAW AGAINST CHILD BEGGARY ENACTED
The Punjab Assembly has enacted a law to prevent child beggary by setting up special centers where orphan children will be kept till the age of 18 and they will be imparted various skills to earn their living and become useful citizens.
KCCI OPPOSES GST ON EXERCISE BOOKS
The Karachi Chamber of Commerce and Industry has opposed 15-16% General Sales Tax on exercise books.
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Edited and prepared by
Khalil Ahmad
[No opinion expressed here should necessarily be taken as reflecting the view of FreePakistan Newsletter.]
