Reframing Our Goals – Sakib Sherani

MANY maybe most of our economic goals and targets are fuzzy and ambiguous. In the case of some critical objectives we should be striving towards, the goal is not even defined.
Hence, as a country we have no idea when we want to graduate to `upper-middie income` status (if at all!), or by when Pakistan will cut down by half the number of absolute poor, or the malnourished and hungry, or the unemployed etc.
In some cases, the end-state has been defined clearly but without any preparation, thought or coordination. A less-than-shining example of state planning was the `education for all` initiative launched by the previous government. A laudable objective, it became enshrined in the Constitution as Article 25-A. The government announced it would increase the allocation for education to 7pc of GDP. But was this number pulledout of a hat? Would it be enough? What outputs and ultimately outcomes will spending the equivalent of 7pc of GDP achieve? How will this money be raised? More fundamentally, are poor budgetary allocations the issue, or howthe money is spent? Too many targets are framed simply as `increase the allocation from X to Y`. On the last point, Sindh is a classic case. Earmarking impressive amounts in its budget for education year after year since 2008, it showcases the most woeful outcomes on the education front after Balochistan, another recipient of PPP largesse in the past five years.
As an aside, it would appear `planning` is not among our national traits. In the mid-1990s, I had the chance to meet the captain of our cricket team on the eve of its departure on a tour of England. I asked him how the team `strategised` before a tour or a game. His answer was shocking. Essentially, he said that the team didn`t need to think before playing because it consisted of senior players many of whom had played county cricket and were familiar with English players and conditions. `Hum nashta kar kay maidan may uttar jatay hain`!Hopefully, the Vision 2025 document of the planning ministry, preparations for which kicked-off recently, will provide more cogent, well-thought-out and clearly articulated economic goals and targets to be achieved on the country`s development path.
Ironically, here too the goal of a serious, carefully deliberated, wellresearched and iterative `consultation` process gave way to a sound-and-light show, with the express aim of gathering `1,000-plus` delegates under one roof. As one delegate noted, the breakout groups consisted of some 30-plus members in each. In the allotted time, each delegate would get approximately two minutes to contribute towards the formulation of what could arguably be the most important document this government may produce.
Nowhere is the disconnect between targets that are currently being pursued versus those that should be pursued more glaring and dangerous than inthe case of tax collection. By virtue of being in an IMF programme, much of our attention is focused on meeting quarterly targets for tax revenue. By focusing narrowly on the collection number, we are missing out on the big picture: how the tax is collected, and from whom.
Given a challenging target for tax collection, on which will hinge Pakistan`s ability to meet the IMF-stipulated fiscal consolidation, the Federal Board of Revenue has resorted to `predatory taxation`. Rather than work assiduously in bringing untaxed and under-taxed sectors and citizens into the tax net, the entire focus of the FBR machinery is on `milking` existing taxpayers, especially the larger ones in sectors such as financial services, energy and telecommunications.
This is a mistake that has been repeated time and again in Fund programmes the quality of fiscal adjustment is not targeted, and often the ultimate objec-tive of tax reform is compromised at the altar of short-term programme objectives that are defined as the achievement of an absolute tax revenue number in a given quarter or year.
Two of the most important objectives that FBR should explicitly be focused on should include: Improving substantially the ratio of direct to indirect taxation in the next three years by doubling its collection of income tax all of it from new taxpayers, or currently registered taxpayers who are non-filers or are declaring `nil` taxable income; Sending tax notices in the next three years to all of the 3.2 million people identified through the Nadra database, who are showing telltale signs of an affluent lifestyle but are not on the tax register.
Nothing could be more emblematic of vested interests being pandered to than the current lethargic pace at which the FBR is pursuing this list a who`s whoof Pakistan. On current trends, it will take the FBR 32 years to completely go through the list! Its intentions on this front have also been exposed by excuses regarding inaccurate data provided by Nadra.
This list should becomethe focal point indeed the sheetanchor of this government`s tax effort for the next three years, along with serious and credible restructuring in the FBR.
Another target that will need to be reframed is `growth`. Simply aiming for a headline 7pc rate of annual growth in GDP is not enough. The explicit goals of economic growth should be sustainability; job creation; reducing income inequality; and inclusiveness of various segments of the population, including rural nonfarm communities.
Like any other target, once it has been set, then planners need to work backwards and see what achieving it will entail the constraints, the coordination, and level of resources needed and assign timelines and responsibilities.