Who should control the purses of Pakistan?

[Pristine]

There is no doubt in anyone's mind that the economy of Pakistan is going from bad to worse. All the experiments from Mehboob-ul-Haq, to Yasin Watto, to Sartaj Aziz, have made lofty claims, but once they are gone, we are left to confront the cold reality that we are in a far worse state than before. I see no reason to believe otherwise, once Mr Shaukat Aziz leaves office. And, guess what, who will be left to lift the ashes once the "imported" financial whizz leaves us and goes back to his "home in USA"?

I have no doubt in my mind that democracy will be restored, not because General saheb wants to restore it, he doesn't; but because he HAS to restore it, due to international pressures. For more than five decades, our financial destiny is controlled by people either elected or selected. All of them have let us down. There is no reason that the current system offers any hope.

This is reason enough, for drastic surgery. Here is a proposal:

"The enormous economic mess prevailing in our country justifies a radical approach. The strings of our national exchequer should, therefore, be restored to their rightful owners. The rightful owners, being the TAX PAYERS of our country. Those who constribute in our national wealth should be made to decide how the amount should be spent. Our elected parliament should continue to be elected the way it does and function the way it does, except that all financial powers be taken from it. The Finance Minister will continue to be an elected parliamentarian, much like he is right now. In addition, there will be "National Economic and Financial Assembly" (NEFA) created. The term for NEFA will be one year. This Assembly will be filled as follows:

1. Top 100 corporate tax payers, appoint one representative each to NEFA.
2. Top 50 inidividual tax-payers will be automatic members of NEFA.
3. Presidents of all chambers of commerce and industries and stock exchanges are automatic members.
4. Remaining 80 members of the assembly will be selected by a random ballot from the database of all the individual tax payers in the country, who have paid taxes greater than Rs 1,000 in the last assessment year.

The total number of the members of NEFA will be 240, the same as our National Assembly and the budget will be presented by the Finance Minister and approved by a simple majority of the NEFA".

This is the proposal, please provide your ideas....

(Only serious replies please)

[CM]

"imported" financial whizz leaves us and goes back to his "home in USA"?

Incorrect, his house is in Singapore - well was there in 1996.

"he doesn't; but because he HAS to restore it, due to international pressures."

Screw international pressure.
China hasn't bowed.
Neither has Iraq, Iran and North Korea.
And Pakistan is a far better country considering resources and geographical importance (exculding China!!).
Plus does the US really want to make an enemy of us - i think not.
Other wise Clinton would not have come.

As for your proposal - you have not studied economics have you???
If you had you would see the stupidity in the whole proposal.

Question for your NEFA:
Who decides who will join??
What are the criteria for joining???
What are the cirteria for the person choosing???
So a janitor who has paid more than 1000 rupees can join the NEFA - look at your 4th point.
What are there powers going to be???
Since when do corporate leaders know anything about the economy???
Why will they join??? - their companies need their expertise!!!
Point 2: The top payers of taxes will be the people with the most money.
Again we get the rich and stupid in power.
What will the powers be of the NEFA??
What will be their objectives????

Answer these and i will give you more to answer.
I have a ton of them.

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CROIRE A L'INCROYABLE

[Pristine]

I am glad you responded. Serious issues are raised by you which were addressed but were probably not clear enough in the original submission. Lets deal with the important points raised by you.

First of all, NEFA members are not full time employees of the government. They are members of the Assembly, who only need to assemble, one a session is called, typically at the time of budget approval, and/or anytime a fiscal decision for the country needs to be approved. Much the same way, these are currently presented in the National Assembly.

Answers to your questions are below. I welcome any further issues you or any member of this forum cares to bring up. We can certainly polish up the finer points.

Question for your NEFA:

Who decides who will join??

The database of tax payers which is already maintained by CBR will decide who joins it. It is very clear that the CBR will prepare a list of top tax payers in the country, both in corporate sector (meaning the companies) and in the individual assesses. These results will be audited by a firm of Chartered Accountants to ensure accuracy. The balloting for the remaining 80 tax payers who will be selected from the individual tax payers will also be conducted from the database of tax payers by a firm of Chartered Accountants, much the same way such ballots are monitored world wide. For example the firm PricewaterhouseCoopers is world-renowned for monitoring the ballot for major competitions.

What are the criteria for joining???

The criteria for eligibility is very simple. If you again check the four categories of members, except for Number 4, all others are automatically members for one term. The highest tax payers in corporate and individual sectors will be taken from the data maintained by CBR, independently audited, and 10 seats are reserved for chairmen of Chambers of Commerce and Stock Exchanges for the FOUR provincial capitals and Islamabad. As for category 4, the only criteria is that these should be tax payers, who have paid an amount of Rs 1,000 or more in the national exchequer during the last assessment year. This is the best way to bring "commoners" in the decision making process of our country. And I most certainly won't descriminate against "janitors" if they are tax payers. Every one has a right to have his voice heard in this country.

What are the cirteria for the person choosing???

What do you mean “choosing”? No one chooses anyone. Its explained above. Categories 1,2 and 3 are members based on pre-defined criteria and number 4 is based on a ballot of tax payers. Anyone can refuse to become a member, in which case the next person in the list will replace the person who has refused the membership. Frankly speaking, making sure that the bonafide highest tax payers join NEFA will be a bigger effort, rather than filling the vacancies. For this purpose the CBR records of the members of NEFA will be publicly available, except for category 3. If anyone feels that he has a claim to category 1 or 2 (highest tax payers in corporate and individual categories) can lodge an appeal with CBR, or to the courts. As all data for taxes paid is openly available, and audited, so chances of fraudulent membership will be minimized.


So a janitor who has paid more than 1000 rupees can join the NEFA - look at your 4th point.

Sure. If a “janitor” has paid taxes worth more than Rs 1,000 in the last assessment year, is “eligible” to be selected, if his name comes out in the ballot. Mind you, to pay taxes of more than Rs 1,000, you need to earn atleast Rs 70,000 in one year, which is approximately Rs 6,000 a month, and pay full taxes on that income. And, yes, if a person pays that much amount in taxes, he/she can be selected in random ballot. Ofcourse, the same person can refuse to become a member, for any reason, in which case he/she will vacate the seat, which will be filled out through similar ballot from the database of tax payers.


What are there powers going to be???

The single-most important power for NEFA will be approval of national budget and all taxation measures proposed by the government. Provincial EFA’s (PEFA) will be approving the provincial budgets. Additionally, any fiscal decision of the government needs to be ratified by NEFA, much the same way it is currently approved by the National Assembly.

Since when do corporate leaders know anything about the economy???

If a corporation is one of the highest tax payers in the country, they must be doing something right. They know how to run their business. And they know how to generate enormous profits to earn so much income and then pay taxes on that income. This is the single most important qualification for them to have a say in how the country spends “their” taxes. They will be more rational in their approach and more pragmatic in their policies. More in the answer to your next question.

Why will they join??? - their companies need their expertise!!!

It is not required that these corporate taxpayers appoint an official of their companies (read category number 1 again). They just need to appoint a representative. Ofcourse, the employees of these companies are required for work they do in the company. These corporations can appoint anyone to represent them. This could mean an eminent economist or an expert in fiscal policy or maybe their chief accountant, if they want. Its their choice. Do you know the staggering amounts of monies these corporations already spent lobbying in Islamabad for their proposals before every budget? Believe me, they won’t shy away from sending their reps to NEFA. They will be stepping on each other to be counted in the top 100 tax payers to be able to send their voice in the decision making and approval of national fiscal policies and budgets.

Point 2: The top payers of taxes will be the people with the most money.
Again we get the rich and stupid in power.

Not really. Admittedly the 160 members of NEFA will be the rich people, but these are the people who also pay staggering amounts in taxes and therefore pay for most of the expenditures incurred by the government, including the Annual Development Plans. Do you know that the highest tax payer in Lahore region, a multinational packaging material company, pays more income tax, than all the individual tax payers in Lahore region combined! The amounts these corporations pay in income taxes are in the tune of hundreds of millions of rupees. Yes, they are rich, but they most certainly are not stupid. And they will do a far better job in managing our the economics of our country than the Finance Ministry has ever done.

What will the powers be of the NEFA?? What will be their objectives????

Explained above. The main objective of NEFA is to provide consistency in the fiscal policies of our country and make the people who provide the most taxes to manage them as well. In all the western countries no government is authorized to raise tax rates or impose a new tax without the people expressly voting for it. For example in USA, it is forbidden in their constitution for the government to impose any new tax without the permission of the people of USA. Elections are held after every two years, and along with selection of the members of congress, there are many questions a la referendum which are asked to the voters. These questions include any new taxation measures or bond issues. Practically, all taxation measures are approved by the people, otherwise they are rejected. Not like in Pakistan, where the government can decide to impose any number of new taxes, which are legalized by the rubber stamp parliament, gagged by the fourteenth amendment. In Pakistan, with the low literacy rate (between 26-35%, even by the most optimistic estimates), we can not hope to impose upon the voters to decide on the appropriateness of fiscal measures. NEFA is our best alternative, providing a balance of truly intelligent representatives of our tax-payer community thrown in with a mix of “commoners” whose only interest will be to provide their voice in better decision making for our country.

"imported" financial whizz leaves us and goes back to his "home in USA"? Incorrect, his house is in Singapore - well was there in 1996.

This might be a mistake. The last I know his home, or estate, was in the New Jersey County of United States. But this point is irrelevant in the larger context. No one is claiming that Mr Shaukat Aziz will remain the finance minister for the next many years. He will definitely be giving up this slot in a relatively short time frame.

"he doesn't; but because he HAS to restore it, due to international pressures."
Screw international pressure.

Listen to the speech of Gen Musharraf in the UN last night. “Pakistan is cognizant of the international pressure for democracy”. Yes, we better be. It doesn’t do any good to be the pariahs of the world. Democracy has to be restored, in whatever form. Maybe Gen. Musharraf will become the President or whatever. This again, is largely irrelevant, as the army never claims to be the champion of economics and fiscal management, anyway.

Plus does the US really want to make an enemy of us - i think not. Other wise Clinton would not have come.

Again I will differ. Read the papers. Despite extensive lobbying by Pakistan and our embassy in Washington, Clinton refused to have one-to-one meeting with Gen. Musharraf in New York. More abjectly, during the dinner Clinton gave for all the world leaders, the US didn’t even allow for a photo-op between Clinton and Musharraf. My dear friend, Clinton didn’t come to Pakistan to listen to our points of view, and to give us importance. He just came to tell us what (he thinks) we are doing wrong, and to give us a warning to shape up. Listen to Clinton’s television speech once again.

If I tell you the process by which the financial “experts” in the Pakistani Ministry of Finance prepare the budget, you will be biting your fingers in amazement and despair.


[This message has been edited by Pristine (edited September 08, 2000).]