Beyond the centre

Pakistan’s federal government has been confused about its role under the constitution regarding the economy and tax collection for decades.

Let’s revisit history: the Lahore Resolution of March 23, 1940 is the basis for Pakistan. It declared that four provinces would become sovereign and autonomous, and that the federal government would deal with three subjects: foreign policy, defence and customs.

However, a few years after Pakistan’s creation, two highly centralized constitutions – 1956 and 1962 – were bulldozed through conspiracies. After losing half the country, a new beginning was made by Shaheed Zulfikar Ali Bhutto in 1973 (faithful to the original 1940 resolution). Sadly, since 1977 (after General Zia’s coup), this constitution has been mauled and disfigured by dictators/hybrid political regimes countless times.

In 2010, the PPP (during the then-president Zardari’s first tenure) reset the 1973 constitution to its original status (although more strengthening remains to be done) through the 18th Amendment. In the same year, the 7th NFC Award also transferred a chunk of resources to provinces instead of earmarking them for Islamabad.

Over the last 14 years, the provincial governments have lived up to promises made under the 18th Amendment and the 7th NFC Award, by increasing their tax collection – although they have a limited tax base. The federal government has miserably failed to increase its tax-to-GDP ratio to 15 per cent or implement devolution under the 18th Amendment.

During his election campaigns, Chairperson of the PPP Bilawal Bhutto-Zardari shared that 17 federal ministries (dealing with provincial subjects) would be abolished at the federal level if the PPP was to form government in Islamabad. This would have allowed the party to curtail wasteful administrative expenditure and spend the funds thus saved on the welfare of people.

It must be reminded, emphasized and reiterated time after time that the federal government is created by the provinces to perform only five major functions: tax collection, foreign policy, defence, regulation of import and export (with shipping), and construction of strategic highways. The federal government has no other major function mandated under the constitution. All other subjects belong to provincial governments and the Council of Common Interests.

The federal government has turned its constitutional role upside down: instead of focusing on the collection of taxes, it has created parallel and bloated ministries/divisions/corporations on subjects that are under the purview of provinces or the CCI.

Let us be totally clear. The constitution mandates the federal government to collect taxes on behalf of the provinces through implementing an efficient tax collection system. Instead of performing its core function, it is appropriating these funds, thereby leaving the funds’ creators - the citizens of provinces – in the lurch to fend for themselves in all sectors: education, health, law and order, justice, agriculture, industry and all other concerns of ordinary people’s lives.

The federal government has carelessly led itself into a debt trap. Bureaucratic minds in Islamabad do not wish to understand their mandated constitutional role. An elite bureaucracy in connivance with other elites will run the economy aground.

Let us also be reminded that the federal government has no role in central planning, with regard to the economy. Centralized economic planning is not mentioned in the constitution. The constitution only mentions provincial economic coordination under the National Economic Council (Article 156).

An economy based on agriculture and industry must de facto be a provincial subject (under the Constitution). However, Islamabad has “assumed for itself” the role of commanding government with regard to the economy through vertical and centralized planning.

The federation is meant to work in a horizontal organogram. It is not a vertical sum of its total parts (provinces). It has been created only to collect unified taxes from all the provinces, regulate the unified import and export of provincial industrial and agricultural goods, formulate unified foreign and defence policies, and construct strategic highways. It is worth mentioning that it has so far failed to construct a strategic highway between Karachi and Sukkur, catering to the country’s two major ports in Sindh.

The federal government currently demands that the provinces’ 57.5 per cent share under the NFC formula be slashed although this is protected under Article 160 of the constitution. If Islamabad’s demands are met, ordinary people are likely to starve, and their fundamental rights to education, health, livelihood, water, sanitation, environment and development will be eroded or snatched.

Lately, Islamabad has unleashed propaganda hinting that provinces take away revenue. In reality, all revenues belong to the provinces. Even under the present 7th NFC, the provinces take less than 50 per cent of the total revenue as Islamabad charges 1.0 per cent for tax collection, and non-tax revenue collected by it is not part of the divisible pool.

Do civilized countries spend more than 50 per cent of their revenue on five supportive functions – tax collection, defence, foreign affairs, import-export regulation and construction of strategic highways – while leaving out vital sectors of education, health, law and order, justice, industry and agriculture?

Pakistan’s predicament is that the federal government neither wants to understand its constitutional role nor does it want the people to understand it. The original governments of Pakistan are its provincial governments. Islamabad wants to continue funding ‘parallel provincial governments’ hidden and veiled behind its 34 ministries, 43 divisions and 400 plus corporations – most of which are loss-making. This is neither its function under the constitution nor its mandate.

Islamabad needs to drastically reduce its administrative expenses and non-combat defence expenditures and restructure its loans with international lending institutions to come out of its self-created debt trap. Islamabad must also do away with its annual public-sector development programme and transfer all such funds to the provinces.

The writer has served as advocat general of Sindh. He tweets/posts @zamirghumro