A lack of clarity
THE NAB chief has confused graft, theft and economic losses. By adding the three he’s trying to add apples, oranges and monkeys.
It was bad enough for the NAB chief to release at a press conference a confused two-pager that is built on unsound reasoning. It was worse that none of the media persons present there could see through the eyewash.
When the former admiral says we’re losing Rs13 billion each day to corruption then the perception that gets created in the mind of the ordinary citizen is that the government, which consists of ruling party politicians and state functionaries, is eating up Rs13bn of public money each day.
Clearly that is not the case, even in his report. Not even close. So what’s wrong with what the admiral says and what’s wrong with the ‘position paper’?
In a nutshell? Everything.
Basically the argument goes that the tax-to-GDP ratio is nine per cent and can “be easily” enhanced to 18 per cent. Whilst the proposition may be true, the attribution of Rs7bn daily losses to tax evasion is misplaced. Above all, this is circular reasoning; simplistic and fallacious.
But before we get into that, let’s stay clearheaded here and not mix up evasion with graft. When a wholesale trader chooses not to declare his actual turnover, and pockets the withholding tax money then that’s stealing, or what we term as tax evasion. The taxman, mainly because he can become a nuisance for the wholesale trader, may receive a small percentage of the evaded amount and that is graft.
So of the supposed Rs7bn that escapes the tax net each year, how much finds its way into the hands of corrupt (public) officials? A small fraction, I would say — not even 10 per cent. Does that mean that the remaining 90 per cent finds itself in the pockets of dishonest citizens then? Even that may not be true given the extensive exemptions and tax-free statuses enjoyed by many sectors including agriculture.
Large sectors of the economy remain outside the tax net because of lack of documentation. The resulting cash economy is what creates a conducive environment for evasion.
To be fair, the present government attempted to introduce VAT, which is the basic instrument in documenting national economies and raising tax revenue. It was other political parties pandering to their urban constituencies that undermined its imposition.
From the media the swansong enters parliament and amidst the ensuing din and clamour, rational argument gets drowned. A coolheaded parliament would first have sought clarity — and simply asked the NAB chief a series of questions such as if he knew the difference between corruption, economic losses, electricity theft, land grabbing and other types of fraudulent activity.
Did he know the difference between holders of public office and private citizens? Did he know the difference between public accounts and private transactions? Instead of seeking out clarity, parliament has gone in the opposite direction; denials, counter-allegations and calls for apology from the media. More confusion, more clutter.
Next stop from parliament is the public meeting — where Imran Khan, true to his style, is at the forefront of sowing more confusion in the public mind as he attempts to link the NAB report to “70 per cent of PML-N politicians” who he labels as tax dodgers.
Good chance that they are tax dodgers, but Khan’s sophistry here is so complex that unbundling it will need either another column or a cross-questioning session.
On to more foolishness now — two days after its release the NAB spokesman “clarifies” and holds the Punjab government responsible for 65 per cent of the graft.
Ah, but wait a minute Mr Spokesman. Didn’t your report attribute Rs7bn of the total Rs13bn daily losses to tax evasion? And isn’t the FBR responsible for tax collection and evasion? Is the FBR under the Punjab government?
Or by corruption do you also mean to include non-imposition of agriculture tax by the Punjab government. Aren’t we getting unusually creative here with definitions?
Also included in the corruption are totally unrelated sums such as power losses, including losses due to loadshedding, losses incurred (indeed profits foregone) of the state-owned enterprises, cost overruns in implementation of mega projects. None of these belong in the corruption category but appear to have been included to inflate the figure.
What would it take to undo this damage? Basically the NAB chief should go, and the author(s) of the ‘position paper’ be brought forward to answer technical questions by a panel of neutral experts, who can then give their position on the ‘position paper’.
Secondly, the Institute of Chartered Accountants of Pakistan should step up to the media — or vice versa — and help dissect the numbers and clear the confusion. So should Transparency International — just to set the record straight. What is corruption, what is theft and what economic loss means.
Lastly, as with most other issues in this country, there is need to build consensus around defining corruption and recognising that all forms of evil are not corruption which refers to receiving graft payments by holders of public office (upwards from the patwari).
Once the target has been defined in this precise a manner, you can ready, aim and fire. The terms of reference for the new accountability commission which will replace NAB ought to be very focused with defined performance indicators on what is required of it.
As with the war against terrorism, the Kalabagh dam, the blasphemy law and so much else, without a clear recognition of any issue, without unbundling its complexity, you can never solve it, you only confound it further.
The writer is an international business strategist and entrepreneur.