More Darnomics
PML-N will find it difficult to spin the opposition walkout from the National Assembly – on account of unbudgeted taxes – in its favour, since it cannot employ its usual responses like attack on democracy or economy, etc, here. The fact that ‘unbudgeted’ measures are being resorted to means the government is behind, not ahead, of the curve, as usual, on the matter of the deficit. This, again, is in stark contrast to tall claims made recently by the prime minister as well as the finance minister – the former promising (again) to break the begging bowl and the latter returning rather happy from the IMF meeting.
And the deficit is a recurring problem because measures to enhance revenue continue to fall short. Surely Nawaz Sharif, or Ishaq Dar for that matter, need little reminding that increasing revenue was one of the prime campaign promises. There will definitely be a visible increase in the tax net, they promised. The export base will be expanded, industry will be given incentives, and trade earnings will fill the revenue gap, they claimed. Yet not even two years into Nawaz’s third government and it is already clear that neither tax collection nor export value-add is going to improve.
The gap is easily explained. One the one had is the government’s sheer incapability of taxing evaders. The matter would test any government in Islamabad, and this one, like all previous ones, has also proved incompetent. Yet it’s not just capacity that matters here. Taxing is a sensitive issue because the most blatant evaders occupy some of the most powerful positions in this Islamic Republic. And more than a small minority of them has helped Mian sb keep his third stint from collapsing. Therefore there is also a very visible matter of political will. Unless attention is given to the right political matters, Dar sb fill find it all downhill for the rest of the term. He’s a little too prominent in matters divorced from the economy, and his Darnomics is not playing out too well, as usual. Nawaz Sharif and Ishaq Dar are reminded that ad hoc taxation will not sit well with the people. They must improve the economy, or the politics will get complicated as well.