Tale of two classes

LAHORE: The hardships faced by ordinary Pakistani citizens have multiplied in recent years, while the luxuries enjoyed by a fortunate few have increased. This disparity is due to a system that favours the elite, despite superficial claims by the state to tax the rich.

The elite in Pakistan can be categorized into four groups. The first group includes top businessmen and their families; next are feudal lords and ruling politicians. Top bureaucrats and members of the judiciary, who enjoy substantial perks, also fall into this elite category. Lastly, smugglers and corrupt individuals live an elitist lifestyle, evading taxes altogether. Addressing these elitist groups is crucial for extricating the country from its current predicament.

While there is no magic wand to improve the economy overnight, even the necessary steps to remove bottlenecks hindering growth have not been taken. We should begin by plugging the leakages within the government and rationalizing the pay and perks of high-ranking government officials and the ruling elite. The leakages in the power and gas sectors are well documented.

Vested interests often attribute these issues to high capacity charges, which is partially true. However, bad governance, corruption and theft cause greater losses than capacity charges. If these inefficiencies are addressed, power rates could be substantially reduced. A well-governed government could save over Rs1 trillion; only strong political will can tackle the vested interests profiting from the current system.

Another major source of leakage at the state level comes from public sector enterprises (PSEs). The losses incurred by unprofitable PSEs are well known, yet even the profitable companies do not generate income comparable to similar private sector firms. For instance, the National Bank of Pakistan earns significantly less than private banks that are half its size. In principle, the government should not be in the business of business; however, privatizing loss-making PSEs could immediately save the state Rs1 trillion a year.

Next, we need austerity in government operations. While disbanding certain departments and reducing the workforce might seem necessary, these measures appear cosmetic. A true austerity programme must address how the government is run. Banning refreshments and limiting foreign trips will not suffice; we must drastically reduce the fleet of government-owned cars, which consume approximately Rs1 trillion in fuel. The concept of free electricity likely exists only in Pakistan. This practice should end immediately. The ruling elite, government employees and judiciary members enjoy free electricity, and some retain these perks long after retirement. They were adequately compensated during their service, but the entitlement to such luxuries is unheard of elsewhere in the world.

Combating smuggling and taxing tax evaders could contribute over Rs1 trillion to the national treasury. By implementing these measures, we could potentially save Rs4 trillion, significantly reducing our budget deficit. If the government can put its house in order, it will be easier to bring other elite groups into the tax net.

The economy is the primary issue facing the country. Ordinary Pakistanis understand that Pakistan is a poor nation, where most struggle to make ends meet. Meanwhile, our ruling elite operates with the mindset of managing a wealthy state.