The IMF is playing havoc with our economy and industry, as if to remind us that we are still ruled by a colonial power
By Huzaima Bukhari and Dr Ikramul Haq
The International Monetary Fund (IMF), according to a private television channel, will finalise Pakistan’s budget for the financial year 2009-10 (FY10) in ‘consultation’ with the country’s officials on May 11 in Dubai. This confirms an old-age adage that beggars cannot be choosers. The channel quoted sources in the Ministry of Finance as saying that Pakistan and the IMF would hold talks from May 4 to 11 in Dubai to discuss the payment of the third tranche of IMF’s loan to Pakistan.
It was also reported that the Federal Bureau Revenue (FBR) would present to the IMF “an action plan under which new taxes would be levied in the upcoming budget. Prepared with IMF assistance, the action plan proposes imposition of new taxes on the services sector while focussing on audit of taxpayers.” Adviser to the Prime Minister on Finance Shaukat Tareen, State Bank of Pakistan (SBP) Governor Saleem Raza and senior officers of the FBR would represent Pakistan during the talks.
The IMF — or the new East India Company — has now virtually taken over the Ministry of Finance and FBR. Its role is the same as was that of the East India Company in the subcontinent, leading to the long British colonial rule during which a few thousand foreigners were able to overpower hundreds of millions of locals. There are striking similarities in the operations of the IMF in Pakistan and those of the East India Company in the subcontinent vis-à-vis revenue collection; both are oppressive, tyrannical, unjust and anti-people.
The IMF-dictated policies are reminiscent of the British rule when the East India Company’s henchmen used to go to the abodes of peasants and snatch most of their produce. According to some historians, the East Indian Company’s tax collectors used to take away one-half to two-thirds of the crops. Therefore, the peasants’ life was most miserable during the colonial period. The current Pakistani government, by imposing general sales tax (GST) on everything, even on salt and agricultural inputs, has resurrected the days of the East India Company.
For more than 150 years, the East India Company (John Company) raised its own armed forces in the British India. The three administrative units of India – the presidencies of Bombay, Madras and Bengal – each maintained their own army with its own commander-in-chief. However, the commander-in-chief of the Presidency of Bengal was regarded as the senior officer of the three. These armies were paid for entirely out of the East India Company’s Indian revenues and together were larger than the British Army itself. All the officers were British and trained at military academies in England. There were a few regiments of European infantry too, but the vast majority of the soldiers were natives. The IMF and World Bank, in the present day technological era, do not need armies in thousands; even a few people can control an entire nation through revenue administration and economic subjugation.
The East India Company destroyed the indigenous industry of the subcontinent to promote the products of the Queen’s England. In the same manner, the FBR is blocking refunds worth billions of rupees due to exporters to ensure the success of IMF’s agenda: Pakistan’s export industry in particular and the country’s local industry in general become paralysed, and the products of other developing countries fill in the gap. The IMF and World Bank want to capture the markets of populous countries like India and Pakistan. This can only be done if the indigenous industries of these countries are either destroyed or taken over by the multinationals that make the policies of the IMF and World Bank.
The IMF has recently ordered Shaukat Tareen to act as the ‘chief tax collector’; he sits in the FBR to supervise that taxes are collected where they are not even due. Similar orders were issued by the East India Company to the local rulers, to act as mansabdars (local revenue officials) on their behalf. These mansabdars unleashed a reign of terror on the locals through revenue collection, as is being done by the IMF’s cronies in the Ministry of Finance and FBR these days. Although they are not ashamed of being treated as slaves by the IMF, citizens of Pakistan have a right to agitate against this neo-colonial behaviour of foreign donors.
It is true that the FBR is facing revenue shortfall of billions of rupees, but does it justify a reign of terror against the taxpayers? In most of the cases, taxes are levied unjustly only because no deal could be reached. In cases where taxes are levied in a ‘friendly’ manner, there are absolutely no problems! Therefore, the IMF is actually lending a helping hand to the FBR to penalise the honest taxpayers, because those who are ‘friends’ of tax collectors are fully protected though they are proven tax evaders.
The sovereignty of a state is measured by the power it enjoys in imposing taxes on its people. These taxes are to be used for the benefit of the less privileged and to ensure general welfare of all the citizens. On the contrary, we are opening our markets to foreign goods so that our local industry becomes paralysed. Is this globalisation? One wonders how the rulers of the day in Pakistan are operating. Obviously, they want perpetuation of their rule and perhaps know that this is only possible if they unquestionably follow the commands of their foreign masters, who only want economic benefits because they are no more interested in subjugating us physically.
It is painful to note that the FBR, to please its foreign masters, has resorted to a tyrannical structure of taxation. According to an Asian Development Bank (ADB) study, the tax system of Pakistan, which was progressive till 1990, was converted into a regressive regime in 1991 with the introduction of massive indirect taxes. As a result, during these 19 years (1991-2009), the tax burden on the poorest households increased by 17.4 percent, while it declined by 15.9 percent for the richest households. The ADB study should serve as an eye-opener for the target-oriented FBR officials, who — in the frenzy of showing higher figures to their foreign masters — have put additional burden of taxes on the poor.
Pakistan joined the IMF on July 11, 1950. After receiving disbursements of a few billion dollars in more than 30 installment since then, what we in Pakistan have so far seen is increasing poverty, depreciating value of rupee, declining purchasing power, increasing electricity and natural gas tariffs, declining standard of living, and increasing unemployment, inflation, de-industrialisation, unequal distribution of wealth, ethnic tensions, child labour and loss of sovereignty.
The IMF is bent upon destroying our agriculture sector through the imposition of new taxes, despite the fact that this sector already pays a number of taxes. Do we really need any other proof to show where the actual power to levy taxes lies? Our economic subjugation is now complete. We are a nation that is neither dead nor alive. The foreign masters will not allow us to die until they squeeze out the last drop of our blood. But this is the result of our wrongdoings in the past.
In fact, our fate was sealed the day we decided not to fulfil our obligations as a nation. The blame of our own misdeeds can easily be shifted to the IMF or World Bank, but the fact is that we are at the receiving end only because we opted for losing our sovereignty and independence. We have no right to blame the IMF or others for this self-destructive path. We have been moving towards self-annihilation and that is not very far now — the coming budget will bring more miseries for the poor segments of society and further debt enslavement for the state!
(The writers, tax consultants and authors of several books, are visiting professors at LUMS.)