PRIME Minister Nawaz Sharif arrived in parliament yesterday with a great cloud of questions hanging over his head, not least of which were the seven questions that the combined opposition had wanted him to answer.
He left answering few of them except perhaps the most immediate — there will be a parliamentary committee consisting of both government and opposition members who will draw up mutually acceptable terms of reference for a judicial commission to investigate the disclosures in the Panama Papers, and presumably other revelations since.
While it was the third time Mr Sharif has addressed the Panama Papers issue directly — two earlier addresses to the nation clarified little — it was still an uneven performance.
At various points in his speech, the prime minister’s delivery suggested a nervousness at odds with the defiant content. Underwhelming too was the business and financial history that Mr Sharif narrated.
While the sums quoted by him were not insignificant, they certainly appear far from the enormous wealth that the prime minister and his family are widely perceived to have.
The speech and the opposition’s response — a walkout that appeared to agitate the PML-N leadership — suggest though that consensus on the scope and powers of the judicial commission will be difficult to achieve.
Mr Sharif appeared to lay down a marker that all those incriminated in the Panama Papers should be equally and simultaneously investigated. Indeed, from the prime minister’s tone it seemed that he expects some of his rivals to be found guilty of the financial misdeeds that they have accused his family of.
Meanwhile, from Leader of the Opposition Khursheed Shah’s brief comments it appeared that the opposition is determined to keep the focus on the prime minister and the first family.
Much may ultimately depend on how those differences are reconciled. For now, the opposition ought to consider that, setting aside all the rhetoric and political posturing, the prime minister has consistently maintained that he is willing to be scrutinised by whatever commission the opposition sees fit. There is, at least, no attempt by Mr Sharif to reject fresh scrutiny.
Where the PML-N is doing a disservice to itself and politics is its attempt to link the Panama issue to conspiracies to hold the country back developmentally.
While Prime Minister Sharif alluded to it in his speech, Finance Minister Ishaq Dar was more direct and insistent in his own speech after the opposition walkout.
That the machinery of the government has ground to a virtual standstill since the Panama Papers first cast a shadow on the prime minister is an indictment of the government, not the opposition or unnamed conspirators.
Consider that the finance minister himself, instead of being immersed in the details of the upcoming budget, is spending a great deal of time acting as the government’s chief political fire-fighter.
Surely, governance ought to still be a priority.
Back to fixed taxes
NOW that the infamous tax amnesty scheme of this fiscal year has comprehensively collapsed, the government is back to the oldest ideas to tax the retail sector. Some early reports say that retailers whose electricity bill is below Rs0.6m will be subjected to a fixed tax of 2pc of their turnover. Talks around the proposal are continuing but it looks as if it might yet be part of the forthcoming budget. Resort to utility bills for tax purposes makes one part of the job easy: locating the taxpayer. But fixed taxes on turnover, pegged to utility bill payments, shows how the mighty have fallen from their avowed intention in the last budget to document the economy, because the transactions of the retailers will remain as opaque as ever.
Pakistan is fighting a losing battle on the tax front, and the repeated return to the same place is a good indication of this. Time and again, attempts have been made to get retailers and wholesalers, who make up almost 20pc of the economy, to document their transactions, and each time these attempts have failed, forcing the authorities to fall back on using utility bills or levying a tax at the import stage as full and final settlement. In the meantime, a massive undocumented sector has grown making large-scale evasion possible even within the corporate sector. Ultimately, the traders are afraid of documenting their transactions and often the reasons they give sound irrational. But the stubbornness has to be broken because fixing their tax liability on turnovers and electricity bills is not only primitive, it also facilitates much of the evasion. The tax amnesty scheme that the government announced last year brought in less than a fraction of the intended number of retailers into the tax net, and collected less than Rs1bn in revenue. The banking transaction tax, presented as a fine for those who insist on remaining non-filers, has also morphed into more of a revenue measure and less of an inducement to file returns. When the government started announcing one extension after another for the deadline for filing returns under the amnesty scheme, it became clear that it had no idea about what to do in the event of the scheme’s failure. Now we appear to be back to square one with outdated proxies like turnovers and utility bills to locate the taxpayers and calculate their liability.
Factory workers’ safety
THE authorities are dragging their feet when it comes to ensuring the safety of factory workers. Consider Sunday’s tragic accident in Karachi’s Korangi industrial area where five labourers, including two brothers from Peshawar, died after inhaling toxic fumes. Reportedly, they were not wearing safety masks and rubber shoes when cleaning an underground dumping tank that contained chemical waste. In violation of labour laws, the factory owner had not installed adequate health and safety mechanisms. As long as factory owners, culpable of criminal negligence, are not taken to task, the informal sector will continue to use cheap labour at the cost of lives and in violation of building rules and equipment standards. More than 70pc of all workers comprise the informal sector, making it challenging for the state to institute legal and administrative structures that ensure their rights are not abused. And although Pakistan has ratified 36 ILO conventions, there is little implementation, and small industry owners continue to ignore the laws. Despite the Factories Act, 1934, being on the statutory books, weak implementation has resulted in tragic disasters on factory floors, such as the Baldia incident in Karachi some years ago when over 250 workers were killed. Meanwhile, poverty, illiteracy and lack of rights awareness contribute to the acceptance of poor working conditions.
Pakistan also lags behind in the provision of safer working conditions because of the poor labour inspection system. The ILO estimates that the country has 336 labour inspectors for 60 million registered workers. Clearly, this is not enough, and bridging this enormous gap, especially in cities crowded with industrial units, through the recruitment of more inspectors is necessary. Surely the frequency of accidents — factory roof collapses, boiler explosions, electrocution, etc — are reason enough for the provinces to form inspection teams and mechanisms for legal frameworks. Responsibility lies with the provinces to protect the exploited labour force by strengthening inspection systems, offering social security for formal and informal sectors; and vigorously instituting laws for a safe work environment.