The performance of Pakistani parliaments (federal and provincial) in carrying out their main functions – enacting laws; review/approve public expenditure and taxation; supervising the work of the government; and debate the important issues of the day – has been mediocre at best, if not negligent. Parliament’s dismal performance has contributed to the appalling state of the economy.
Our assemblies have never asserted their role as a co-equal branch of government. For more than three decades, they have become bodies of approval, renouncing to influence budgets, to hold governments accountable or to debate key economic issues. The nature of the debate in the assemblies is akin to a school pep rally, with lots of excitement but little substance. Legislators’ lack of interest in their responsibilities has rendered assemblies ineffective and meaningless in representing citizens’ concerns.
The recent debates over the mini-budget and the SBP bill have been prime examples of unnecessary and frivolous parliamentary debate on important issues. The majority of citizens reject parliament as chaotic and irrelevant. By abdicating their responsibilities, the assemblies have become “partners in crime” with successive governments in the deep malaise and economic and social mess that Pakistan faces.
Pakistan’s fiscal collapse is an example of parliament’s failure to deal with a serious national crisis. On the contrary, through inaction or endorsement of bad fiscal and spending policies, the assemblies have contributed to the fiscal crisis that has turned Pakistan into a beggar state. Here are just a few examples of how the ambivalence of lawmakers has led Pakistan to fall into debt and perpetually lack funds to spend on reducing poverty, improving human development and promoting growth.
The Fiscal Responsibility and Debt Limitation Act requires public debt not to exceed 60% of GDP – and Parliament’s conduct has been deplorable in enforcing this law. The disinterest of lawmakers has led to flagrant violations of the law by successive governments and an alarming increase in public debt and interest charges. Public debt now represents nearly 80% of GDP and interest on public debt represents 60% of tax revenue. The failure of our lawmakers in their duties means that every newborn comes with a shiny debt of Rs200,000. The message is clear: congratulations on your birth, ordinary Pakistani, pay our excesses now!
Over the past 15 years, successive parliaments have blindly accepted budget deficits totaling nearly 30 trillion rupees! No wonder we are in debt. Lawmakers made no sensible suggestions to rein in spending or raise taxes – the only solutions to reducing the deficit.
Examples of gross negligence include the approval of trillions of rupees to prop up loss-making state enterprises, fund untargeted subsidies, and increase the seemingly endless and unwarranted benefits and privileges of Senators, MPs and MPs. Legislators, especially those in the provincial assemblies, have been criminally negligent in addressing the enormous waste in government. Their lack of interest in this issue is blatantly disinterested. Lawmakers are among the main beneficiaries of wasteful spending – from the creation of phantom jobs, contractor-led projects and subsidies given to unviable businesses.
The failure of Parliament is also exemplified by Pakistan’s unfair tax system, with the poor bearing the brunt of indirect taxes (eg GST on essential goods consumed by the poor) and the rich not paying their fair share. Indirect taxes now represent 65% of total taxes, their share having increased over the last decade. Year after year, legislators have voted to increase indirect taxes, rather than increasing direct taxes. Most legislators are very wealthy and know that more direct taxes will reduce their disposable income. Their tax voting behavior makes it clear that the legislators only represent themselves, the wealthy class and the elite, not the average Pakistani.
Some of their negligent and reckless actions on the tax front include voting to maintain the farm income tax exemption and very low taxation of booming sectors like real estate and the stock market. In the current economic conditions, when inflation is high and the disposable incomes of the poor are shrinking, it is criminal for legislators to approve the mini-budget through which indirect taxes of about Rs 300 billion have been been lifted. A fairer approach would have been to impose a super tax on large corporations, which made nearly Rs 1 trillion in profits in FY21, and a wealth tax on 200,000 stockholders. whose market value has increased by 5 trillion rupees over the past decade. However, since the majority of lawmakers are the recipients of huge corporate profits and obscene wealth gains from real estate and the stock market, they shamelessly voted to increase indirect tax revenues.
Most Pakistani legislators report extremely low incomes on their tax returns. Compared to their super-rich status, their returns smack of tax evasion and tax evasion. Moreover, the taxes paid by legislators are insignificant compared to the expenses of legislative bodies. The total income tax paid by senators in 2019 was a laughable 100 million rupees, compared to the 3800 million rupees spent on the Senate. Members of the National Assembly paid a pitiful Rs400 million in taxes, while Rs5600 million was spent on the National Assembly.
In the Punjab and Sindh assemblies, members paid Rs.140 million and Rs.70 million respectively in taxes, against expenditures of Rs.3,200 and Rs.2,800 million. In a laughable irony, our shameless lawmakers don’t even raise enough revenue to cover their own costs. The taxes paid by these several hundred super rich are reprehensible and a slap in the face to honest taxpayers. Legislators have no individual or collective awareness that their habit of paying taxes sets the tone for the rest of the taxpayers. They totally neglect their duty to be role models for taxpayers.
Finally, the largely insufficient time devoted to the budget debate is a clear example of the nonchalance with which legislators assume this function. In many well-functioning parliaments, budgets are debated over several months. However, in Pakistan, lawmakers still accept “urgent work” to pass the budget. At most, a few weeks are granted for the budget review and no more than several days for the budget debate. We spend more time bickering on television programs than in the assemblies themselves.
Most of the crises that Pakistan faces are partly due to lawmakers not doing their job for which they were elected and for which they enjoy huge benefits, privileges and honours. In the interests of providing Pakistan’s 220 million citizens with a bright future, national and provincial legislators must devote less time to televised debates and more time to seriously discharge their duties – especially their responsibilities is about approving sound fiscal and spending policies and holding governments accountable for results.
The continued rise or fall of this country will be decided by our fiscal sustainability – will our wealthy parliamentarians finally assume their role in making Pakistan a prosperous and respectable nation, or will they continue to support bad policies that will promote begging and beggars? loan in perpetuity?
The author is a former adviser to the World Bank.