Wednesday, December 06, 2006

The stock exchange should have no place in a developing country like
Pakistan. It is not an institution to promote industrialization. In fact, it
is more or less a gambling den where the savings of the middle class people
are regularly siphoned off, says an eminent economist. "No investment had
been made in education, health, water and power sectors which could pull the
country and its people out of abject misery while more than $20 billion had
been received in foreign remittances," Dr Akbar Zaidi said this while
addressing the weekly lecture programme of the PPP on "Fiscal Policy and
Development", held at the party secretariat on Sunday. He said this large
fiscal space gained due to 9/11 episode could have been used in enhancing
trade and industry activity and creating employment but this money was used
by the military regime for plots and stock exchange and to enrich the
unscrupulous upper class, which ultimately increased the income gap in
Pakistan. The economist said that loans had been rescheduled while more than
$20 billion were received through foreign remittances alone. "The billions
earned in this way also go tax free in order to boost the so-called investor
confidence," he said, adding, as a result property values had been pushed
out of reach of even the upper middle class. Dr Akbar Zaidi recalled that by
far the highest expenditures as percentages of GDP had been made by the
government of late Zulfikar Ali Bhutto on social sector, infrastructure,
consolidating steel and machinery manufacturing and developing heavy
industrial base in the country. He said these facts had been hidden from the
public owing to long years of propaganda and misinformation and asked the
PPP to reopen the subject of services to the country and its people rendered
by the late Bhutto. He felt that such a discussion would also be of great
help to the present PPP leadership to take up a progressive course.
Emphasizing that an anti-people economic policy could never result in a
pro-people fiscal policy, Dr Zaidi said that the bulk of the tax income in
the country consists of indirect taxes on every item of daily use. He said
this was a regressive system where the poorest and the 50% population living
below the poverty line were paying indirect taxes at the rate at which the
richest were paying it.

The sales tax, which brought in the highest tax revenue, was the most unjust
and the most regressive tax that had been levied at such high rates by the
federal government. Taxes should be progressive in which incomes should be
taxed directly, he added.

The bulk of taxes should consist of direct taxes levied on the rich in
proportion to their incomes, he said while rejecting the excuse that because
of tax evasion collection of direct taxes was not possible and thus indirect
taxes had to be levied.

This argument was put forward only to reward and facilitate rich tax
evaders, he remarked. Why should the burden of their crime be shifted on the
poor? Why can't the government take effective measures against tax evasion?
Dr Zaidi questioned.

"Our record shows that the democracies in the West and the international
financial institutions had always extended their full financial support to
military dictators in Pakistan and had withdrawn their support and even
imposed sanctions when elected democratic governments took over," he said
and added that foreign loans were accumulated in the days of General Ziaul
Haq and these had been wasted through and through.

Dr. Zaidi said the succeeding democratic governments had to pay around six
billion US dollars every year only as interest payment on these loans.

The economist strongly advocated for instituting an inquiry under a civilian
NAB to determine who took the foreign loans and where these were spent.

Former federal minister and Coordinator Karachi Coordination Committee of
the PPP, Aftab Shahban Mirani, presided the function.