The triple whammy

The term 'double whammy originated in the US in the 1940s and is usually associated with sports and the one-two knockout punch in boxing. However, in the UK, the phrase came to be used during the Conservative Partys 1992 election campaign, in which the Tories used a poster to undermine the Labour Party. It contained the words Labours Double Whammy. The poster displayed boxing gloves, on which one glove had the message 'More taxes and the other, 'higher prices. The poster proved to be a highly effective, as the Conservatives won the votes with a 'heavy mandate. In Pakistan, thanks to our Awami government, we have a 'triple whammy, which too has knocked out the citizens, as all the three promises of 'Roti - Kapra and Makan during election have disappeared into thin air and have been replaced with - more taxes, higher prices and the lack of good governance. The governments 'Triple Whammy, which they insist is being forced upon them by the World Bank, IMF and other donor agencies, with a 'Do or Starve ultimatum, is the only way of saving the country from an economic collapse. No doubt, the economy is in a dire state and drastic measures have to be taken to save the situation. According to my friend, Ayaz Babar, RGST is necessary to broaden the tax net, as there is massive tax evasion in the country because of the lack of documentation and the levy will lead to the reduction of the black econ-omy. This will consequently result in collection of more income tax from the businesses, which have been evading the taxes. GST is also being levied in developed countries, to check tax evasion, in the form of VAT and in India, sales tax/VAT, is a key revenue earner, as it documents the sales at the retail level. And according to Dr Ashfaque H Khan, RGST seems to have been misunderstood by the taxpayers and that it will increase the tax burden of poor consumers and is a recipe for destroying businesses and trade in Pakistan. This, according to Khan is a misconception, as it is a value added, consumption-based tax, as the more you buy, the more taxes you will pay, which, it is assumed, will be by the rich. There are 141 countries that have implemented this tax successfully and are reaping benefits of higher revenue. He asks, 'If it can work well in those countries why cant it work in Pakistan? (The News Tuesday, November 16, 2010). Therefore, what one has to see is, whether RGST will affect the prices of food and other essential items, which are used by low income groups. If they are not affected by the new tax and it does not burden the low-income people, then it might work out. But if it results in escalating of the already high prices of essential items, then the government is in serious trouble and would be like adding fuel to a raging fire. The government claims that essential items which are being marketed in loose form, like loose milk, flour, rice pulses, etc., have been exempted, but any product to which value is added and is in a packed form, then RGST will be charged on the product. This means almost all products being sold in retail shops, whether it is packed tea, milk, rice, flour, pulses, etc, will become more expensive. Economist, Dr Kaiser Bengali has stated that in fact the prices of the goods should actually come down once the RGST is implemented. The reason for this according to him is, 'Sales tax is compounded at every stage of the value addition - it is calculated on the total price plus sales tax paid at each stage. All this information has to be communicated to the people effectively by the government, otherwise the traders would take undue advantage and increase the prices even where the tax is not applicable. However, according to my dear, learned and enlightened friend, Dr Qazi Ahmed Kamal, the state-owned blue eyed white elephants like PIA, Pakistan Steel Mills and PEPCO, etc, which run at a loss and are being fed by the sweat and blood of the common man, suck up RS 235 billion per year. At the same time, the country approximately spends over Rs. 20 billion per year on a total of 342 MNAs and 728 MPAs. This whopping figure does not include the expenses of the 79625 total Union Council members. And on top of that, the combined estimated expenditure of the Presidency and the PMs Secretariat is about Rs900 million per year. As such, we, the citizens, support and feed more than 80, 000 representatives, who do nothing, but bleed this country. And are now they are demanding the citizens to do more and provide them with another pound of flesh from their undernourished bodies, so that they could continue to live in luxury and enjoy the Good Life, while the poor are advised to eat grass. According to experts, if the government would reduce the above wastage and expenditures by even 50 pc, there would be no need for RGST or any additional taxes. Such is the tragedy of this land of the Pak and the Pure. But once again, where lies the truth is for the experts and the economists to clarify, but many feel, including the opposition and even the coalition partners, that the government is showing a total lack of 'Sense and Sensibility. For the ordinary citizen, it could be the last straw on his back and could ignite a fire that could burn the fingers of the government and bring Humpty-Dumpty down from his Ivory Tower. And when that happens, all the Kings Men and All the Kings Horses will not be able to put H-D back in his Tower again. Instead of targeting the common man, the government should expand its tax net, by taxing the agricultural income, the rich and the famous, reduce corruption and the massive tax evasion and its own expenditures first. It should shed the excessive fat from its well-fed body, before burdening the common man with extra taxes, higher electricity tariffs, food shortages, etc. Is it surprising that people are talking about a revolution and are being advised to attack the godowns of sugar and flourmills? As the good Dr Kamal has pointed out, the famous American founding father, Benjamin Franklin had stated, taxation without presentation is tyranny. Hamid Maker (trust@helplinetrust.org)

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