Transforming Pakistan’s Taxation System Futuristically

Transforming Pakistan’s Taxation System Futuristically.

(A Macro Message).

The Holistic Integrative Rationale: Geosociology and Political Economy:

          This paper proposes to probe and prove the centrality of rational, fair, judicious and Just Taxation to the Sovereign Strategic Survival and Peaceful Progress of Pakistan as a Nation-State and Society.  The Macro Integrative Holistic Vision of this succinct seminal paper is its Islami-Pakistani Geosociological and Political Economy Rationale.  Pakistan needs, most critically at the present cross-roads, to opt to transform itself futuristically and peacefully to opt out of dysfunctional Western, Capitalism, in favour of the Islami Geosociological System of the Political Economy.  All Governments need and depend on Funds: monetary resources and revenues for self-maintenance as well as National Development, Defence and Security.  There are two main sources of such Funding:

 

1. Internal Taxation, Donation, Borrowing and Saving; and

2. Foreign Debt.

The first source secures Sovereign Independence by means of Sovereign Strategic Self-Reliance.  The second, as an evil agent and devilish disciple-instrument of International Imperialism, strikes at the very roots of National Sovereignty, to cripple and paralyse it.

 

Pakistan has become, increasingly down the decades, a disabled and dysfunctionally dependent client state, precisely because of its ever mounting and mountainous International Debt and Debt Servising (1).  Its salvation lies in resorting to and relying on Domestic Sources: Internal Taxation, etc.  Pakistani people must be motivated by a Patriotic-Nationalistic Culture to pay their taxes honestly and willingly, in order to save and serve Pakistan, sincerely and steadfastly.  Taxation is critical to save, secure and sustain Pakistan, Geosociologically as well as Politico-Economically, as analysed in the present essay. 

 

1. What Is Taxation?: Theoretical constraints:

The Penguin Dictionary of Economics (2) defines Taxation as under:

 

          “A compulsory transfer of Money (or occasionally of goods and Services) from private individuals, institutions and groups to the government.  It may be levied upon Wealth or Income, or in the form of a surcharge on Prices.  In the first case it would then be called a Direct Tax; in the latter, an “Indirect Tax”.  Taxation is one of the principal means by which a government finances its expenditure”.  (P. 398).      

 

The Macmillan Dictionary of Modern Economics (3) defines Taxation similarly, as reproduced below:

 

“Compulsory levies on private individuals and organizations made by government to raise revenue to finance expenditure on Public goods and services, and to control the volume of private expenditure in the economy.  Taxes are classified in various ways.  Some are called Direct Taxes, examples of which are Income Tax and Wealth Tax.  Others are called Indirect Taxes.  These are taxes on transactions, especially expenditure.  Examples are Excise Duties and Value-Added Tax”.  (P. 413).

 

Incidence of Taxation:    

         

According to the Macmillan Dictionary cited above:

 

“This refers to the eventual distribution of the burden of tax.  It refers to those who suffer a reduction in their real income resulting from the imposition of a Tax.  The incidence of a tax may be quite different from the Impact of Taxation.  Thus a Sales Tax may actually be levied on a wholesaler or retailer, but he is able to pass on the burden of tax in part to his customers”.  (P. 192).

 

          Impact of Taxation:

 

“This simply refers to the person, company or transaction on which a Tax is levied.  Someone is responsible for total or long-run effect of such a change”.  (P. 190).

 

          The above definitions lead one to the consideration of the critical issue of:

 

Progressive and Regressive Taxation:

 

          Going by the Macmillan Dictionary:

 

“Progressive Tax generally refers to a situation where the proportion taken in tax (the tax rate) rises with income or spending power.  Most income tax systems in Western countries are progressive.  This is achieved by a system of rising Marginal Rates of Tax with increments of income…..  Economists and politicians who have an egalitarian philosophy tend to favour progressive taxes”.  (P. 345).

 

          And now we can turn finally to the last definition, as quoted below from the same source (the Macmillan Dictionary of Modern Economics):

 

          Regressive Tax:

 

“A situation where the rate of tax falls as income rises.  Most Indirect Taxes are generally held to be regressive.  With Excise Duties the same sum of tax is paid per unit purchased.  This represents a lower proportion of income, the higher the latter becomes.  Poll Taxes are also regressive”.          (P. 366).

 

Justice and Equity, Altruism, Equality and Welfare:

 

          Thus, the decisive distinction between Progressive and Regressive Taxation has raised these socially debatable, if not divisive, issues of Egalitarian Philosophy and Welfare Economics, the current-contemporary paradigm of which is Altruistic Ethical Economics.  (4).  We shall return to this serious subject later.  For the present, the intention was simply to raise this crucial concern of general humane welfare.  After this theoretical background, Taxation will be contextualized in Pakistan, for its real life applications, impact and effect, as in the following discussion.

 

1. Taxation In Pakistan:

 

1. Its Geosociology (5):

Geosociologically, Pakistan, the Sovereign Nation-State and Society are characterized by:

 

1. Islam:

 

Perennially Modern-Futuristic Integrative Islam: of Allah and His Prophet ().Their Original Islam of the Holy Quran.Not of any deviant or divisive sect of schism.It is Pakistan’s Creative, Inspiring Ideology and the single most unifying element of its Psyche.Islam as Islami Democracy in an Islami Welfare State, Society and System: State Social System.

 

1. Pluralism:

 

Pakistan is a multi-cultural, multi-ethnic and multi-linguistic Muslim State and Society.This natural, normal and congenital Socio-Cultural Pluralism is the quintessential core and spirit of its Islami Democracy and Political Federalism.

    

1. Federalism:

Pakistan is, Politically, a Federation because of its basic hardcore Socio-Cultural Pluralism.

 

Both of these creative factors and forces are the secrets of Pakistan’s Ideological tenacity and Geosociological resilience.  Its pluralistic variety is the source of its strength to unite it.

 

1. Geostrategic Location:

Pakistan is located geostrategically at the cross roads of History and Geography.  Therefore, of Destiny and Destination towards a Peacefull Prosperous Future in Sovereign Fraternal Freedom.  This can the best be sought, secured and ensured by Islam as the Perennial Peace Paradigm and Muhammadi Moral Model, as activated and actualized in Islami Democracy in an Islami Welfare State and Society, of which true Islami Justice for Equity, Social Welfare and Sovereign Fraternal Freedom are the defining qualities as well as realities.  (6).

 

1. Poverty, Population Explosion and Illiteracy (7):

These are persistent chilling challenges to the Past-Present-Future Continuum of Pakistan.  That essentiates the just balance of the Four Ds: Development, Defence, Demography and Debt.

 

1. Agricultural-Rural Economy:

The Future Wars are forecast to be Eco Wars: Economic, Ecological and Environmental: over food, clothing and shelter as Basic Needs redefined as Inclusive Human Rights.  Also over Human rights, per se.  Above all Water Wars --- water being integral to the Natural Life Support System.  (8).  Pakistan needs to secure both its Agricultural Base, and its Inherent Water Rights --- which is simply impossible without the just resolution of the Kashmir Dispute in the Immediate Future --- not just the Foreseeable one.  (9).

 

1. Unplanned Urbanization: 

Unchecked city sprawl in all directions and shanty town “kutchi abadis” and “jhuggies” breed law and order problems and poverty pestered malcontents.  Social Sector Development needs to be taken to where it is most urgently and critically needed --- the rural and urban poor.  That is the recommended proactive plan to cope creatively with Unplanned Urbanization.

 

1. True Islami Justice in Sovereign Strategic Self-Reliance and Fraternal Freedom. 

2. Islami Social Welfare System:

This essentiates to protect and promote the inherent interests of the poor and middle classes, including the fixed income groups, senior citizens and pensioners hard hit by unemployment, inflation, spiralling cost of living and escalating prices.  Self-Employment must be patrionized.  The morally-just principle of “The Same Pension For The Same Rank / Grade”, should be practiced.     

 

1. Pakistan’s Political Economy (10):

Pakistan’s Political Economy, like Pakistan, itself, is a pitiable perilous prey to the 21st Century New Western International Imperialism-cum-Colonialism and its Indigenous counterpart, as actualized in International Corporate Capitalism, most manifest in Globalism and Globalization.  It is the perpetually pestered product of Collapsed Systems and Collective Leadership: globally, regionally and locally-nationally.  (11).

 

The Remedy: Return to the Roots: (12)

 

          That means Pakistan’s Moral-Material, Spiritual-Secular Holistic-Integrative Ideological Roots.  Futuristically speaking, the Road To The Future lies in the Past-Continuous Turning Future: Learning Lessons From Human History, inclusive of Muslim History and Pakistan’s own short, shocking tragic-traumatic history.  In practical terms that means:

 

          A Single Strand Agenda As Sovereign Strategic Self-Reliance:          

 

          In Thought --- Policy, Word --- Rhetoric turned – Reality --- and as Deed --- Activist Action and Implementation.  That is where Taxation comes in Pakistan’s Futuristic Taxation Policy --- as inspired by the Islami Political Economy System.

 

Policy, Principles and Practices: 

 

          It must be inspired by:

 

1. Sovereign Strategic Self-Reliance:

Both Politico-Economic-cum-Socio-Cultural, and National Defence and Security-wise.  In the ultimate analysis, National Security is deeply dependent on National Integration --- which is the core-key Sociological factor.

 

1. Freedom From:

Imperialism-cum-Colonialism, both International and Indigenous: the NATO-MIC-IMF-WB-ADB-WTO nihilistic nexus.

 

1. Just and Fair Taxation for Sovereign Strategic Self-Reliance and Sustainable Fraternal Freedom:

 

1. Progressive rather than Regressive Taxation.

2. Broadening the Tax-Base to net in all liable to just taxation.

3. Rationalising the Tax Rate: Why do people voluntarily pay the religious taxes like “Zakat”, and charities like “Khairaat” and “Sadaqaat” --- and not the Secular Taxes?  The reason is manifold:

 

1. Religious sanctity.

2. Reasonability of the Religious Tax rate: just 2-1/2%.

3. Poor government and taxation system credibility.

4. Multiple and excessive taxation.

5. Massive and mounting corruption --- both general, in the government, and particularly in the taxation system.

1. The GST needs to be divided according to the actual need between the three Decisive DS:

• National Defence and Security;

• Social Sector Development for National Integration and Social Cohesion;

• Debt servicing or repayment.

 

1. Motivational Tax Campaign aimed at the “Awami” masses as well as elitist classes in the media, to sensitize and consciencetise them, tax-wise.  This should be done consistently and persistently.  The ruling and power elite must emerge as worthy exemplers --- by not only paying their due taxes, honestly and regularly, but also dedicatedly and decisively donating their wealth and weal, entirely, to salvaging and securing Pakistan, permanently.  If they love to rule Pakistan, personally, partisantly and parochially, as well as dynastically, they need to prove their love practically for Pakistan by both donating their wealth to it, and investing it in Pakistan, rather than stacking away in tax free havens abroad.

 

1. Islami Nationalism and Human Rights: (13)

 

The Tax Campaign needs to be inspired by religious motivation to Save, Sustain and Serve Pakistan by means of Sovereign Strategic Self-Reliance.A fool-proof, fully transformed Taxation System is the key to it.Integrity should be its moving spirit: Moral, Mental and Monetary.

 

Conclusion: (14)

 

          Sovereign Strategic Self-Reliance is the sesame secret to Pakistan’s integrally interdependent twinsome National Defence-Security and National Integration.  The Key to that is Just Taxation which inspires true trust and self-motivation.  Finally, the present Chinese Model of Economic Development merits serious study as a success story.  That, under the Islami Political Economy System as Islami Democracy in an Islami Welfare State, Society and System, the core defining quality of which is true Islami Justice in Sovereign Strategic Self-Reliance and Fraternal Freedom.  (15). 

 

          Constituting a National Commission of Experts on the Islami System of Political Economy focusing Islami Democracy, Economics, Banking and Taxation, is Pakistan’s critical need of the hour.       

 

References

 

1. Damien Millet and Eric Toussaint.  Who Owes Who?: World Debt.  Zed books, London, NY; 2004.

2. Graham Bannock, R.E. Baxter and Ray Rees.  Penguin Reference Books; 1987.

3. David W. Pearce.  (General Editor).  Macmillan Reference Books; 1989.

4. Ikram Azam.  International Political Economy: Globalization and Altruistic Ethical Economics.  The PFI; 2010.

5. Ikram Azam….. 

1. Geosociology and the Future.  The PFI; 2004.

2. Global Peace: The Geosociological Imperative and the Imperial Hubris.  The PFI-MVs, and IKIU, Iran; 2013.

1. Ikram Azam:

1. The Islami Perennial Peace Paradigm and Muhammadi Moral Model.  The PFI; 2009.

2. “Nazriya-e-Pakistan”: The Vision of Pakistan: Islam.  The PFI; 2010.

1. Ikram Azam.  (Ed.).  Some Significant 21st Century Trends and Issue: Poverty, Population, Peace and Sustainable.  The PFI; 1998.

2. David Day.  Eco Wars.  Paladin, UK; 1991.

3. Ikram Azam.  Future Focus: Kashmir.  The PFI; 2003.

4. Ikram Azam.  Op. cit.: Ref. no. 3.

5. Ikram Azam.  Islam and the 21st Century Leadership.  The PFI; 2011.

6. Op. cit.: ref. no. 6.

7. A.R. Shad.  The Rights of Allah and Human Rights.  Adam Publishers and Distributors, Shandar Market, Chitti Qabar, Delhi, India; 1993.

8. Op. cit.: ref. no. 4.

9. Ikram Azam.  Op. cit.

 

Select Bibliography:

 

 

• Robley E. George.  Socioeconomic Democracy.  Praeger; 2002.

• Mahbub-Ul Haq:

1. Reflections on Human Development.  OUP; 1995.

2. A National Agenda.  Islamabad; 1993.  (Pub.: The Author).

• Amartya Sen:

1. On Ethics and Economics.  OUP; 1999.

2. Poverty and Famines.  ELBS; 1987.

• Abdur Rashim Hamdi.  Islamic Banking.  IPS, Islamabad; 1992.

• Prof. Khurshid Ahmad:

1. Islamic Approach To Development.  The IPS; 1994.

2. The Contemporary Economic Challenges and Islam.  IPS; Ibd.; 2002.

• Nasim Shah Shirazi.  System of Zakat In Pakistan.  Int. Inst. of Islamic Economics, Islamabad; (IIUI; 1996).

• Dr. Arshad Zaman.  National Security and Development Strategy.  Int. Inst. of Islamic Thought, Islamabad; 1990.

• Abul A`la Mawdudi.  Human Rights In Islam.  The Islamic Foundation, UK (Kenya, Nigeria); 1993.

• Dr. Muhammad Nejatullah Siddiqi.  Economics: An Islamic Approach.  The IPS and Islamic Foundation; 2001.

• M.H. Nuri, et al.  (Ed.).  Balochistan: Rationalization of Centre-Province Relations.  IPRI: Islamabad Policy Research Inst.; Islamabad; 2010.  See: Ikram Azam: “Greening Balochistan: Futuristically!”  (pp. 107-114). 

 

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