Darnomics again
Even after the extension in the Voluntary Tax Compliance Scheme (which expired this week), and the government’s strange resort to arm-twisting to extract this so called voluntary acquiescence, the final number was barely above 5,000 – a far cry from Dar sb’s one-million boast. In quantitative terms, therefore, another fiscal has all but gone by with the tax problem still unsolved. And since this was one of the principal promises on the campaign trail – and the electoral cycle is also fast running its course – the government will face more than just economic/financial pressure in the months ahead.
Yet Darnomics has not lost any shine where it matters. In fact, its influence has even permeated the otherwise sovereign confines of the state back. When the governor recently waxed eloquent about the economy, for example – with the higher growth, lower inflation, increasing reserves, decreasing deficit, etc – perhaps he failed to appreciate the link between tax failures and slow private sector investment in our particular case, just like the finance minister. The private sector has long suffered text-book crowding out because of excessive government borrowing from the money market. That, of course, was necessitated by its obsession with borrowing, owing in turn to the inability to raise revenue by traditional means – old fashioned taxation and exports.
The economy has not been under pressure lately, that much is true, but the bulk of the elbow rooms stems from exogenous factors, like International Brent collapse, and not the work of indigenous policy. That growth has remained the lowest in the region despite no headwinds should, actually, cause some concern in Islamabad. Unfortunately, though, all is still well as far as the finance ministry is concerned. However, if by all-well Dar sb means another year of no progress on taxes – direct or indirect – and the government still forced to borrow to survive, and the private sector still pushed aside, and growth still low, then the grass is indeed green. But in terms of measurable progress, Darnomics has yet to deliver much to the people.
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