0
THE federal cabinet took two correct decisions in its meeting on Wednesday.
One was to send the changes to the net metering policy back to the energy ministry for reconsideration. And the other was to reinstate a tax rebate allowed to researchers and teachers in higher education institutions which everyone was told suddenly in December 2024 had been withdrawn in the budget announced in June 2022.
In both instances, we had a story that was rather typical of how things are done in Pakistan, and how it presents us with a problem to be solved. In the case of the solar policy, the energy ministry literally took the explosive success of their last net metering policy and presented it as a failure, arguing that all the beneficiaries of that policy were “elites” who had become a burden on the power system, and carrying this burden was the main reason that electricity bills had become so expensive.
This was a rather odd way to perceive success. One would think if they were able to add something like 7,100 megawatts of power generation capacity without paying anything from the state’s own money it would be a good thing. They said that 283,000 households had availed of the net metering policy, and this number was very small by comparison to the 40 million households on the grid.
The enduring problem here is that this figure — 283,000 — actually needs to rise to 40m, and the question they should have jumped to ask themselves was ‘what’s the best way to get there?’ Instead, they asked ‘how do we stop this?’
All’s well that ends well. But it’s a good idea nonetheless to find lessons to draw from such episodes.
It was something similar with the withdrawal of the tax rebate. I use this as an example because it impacted non-elite incomes, which have been under the anvil in any case as the government struggles to stabilise its fiscal equation, and also because it is illustrative of the way in which our tax bureaucracy has grown accustomed to operating over the decades. All those who run a business of their own have horror stories to share of their experiences with the tax authorities.
In the case of the rebate in question, universities around Punjab received a notice from their higher education department of the provincial government informing that ‘Clause 2, Part III, Second Schedule of the Income Tax Ordinance 2001 has been omitted’ in the Finance Act 2022. The clause covers the rebate enjoyed by teachers and researchers, and other notices served to the universities said that they will have to recover arrears from the previous two years as well.
Now you might surmise that teachers and researchers in Pakistan’s higher education system are not exactly ‘elites’, and undoubtedly many were quite worried that a very steep tax bill is about to be dropped on them for something that nobody even knew about for two years. If the said rebate was withdrawn in 2022, how come everyone was asleep since then and only woke up in December 2024 to start demanding recovery of this tax, along with arrears?
Luckily better sense prevailed. News reports appeared shortly afterwards, citing the finance minister saying the government was asking the IMF for permission to allow this rebate to continue, and by now it appears this permission has been granted and the cabinet has agreed to reintroduce the rebate via some kind of legislative action, either an ordinance or perhaps inclusion in the money bill for the next budget and give it retrospective effect.
All’s well that ends well. But it’s a good idea nonetheless to find lessons to draw from such episodes. Lesson one, the big mistake the energy ministry made was to mismanage the messaging around its net metering policy revision. They cast the beneficiaries of their own policy as a “burden” and presented the explosive growth of solar rooftop generation in the country as a problem to be solved. Instead, the simplest thing to do was to say ’our net metering policy has been a massive success, we have seen explosive growth in the adoption of clean, green solar rooftop generation as a result of it, and the cost of one unit of solar power has dropped massively.
Now the government wishes to pass the benefit of this price drop to the people, and the revised net metering policy will ensure this by aligning the net metering rate with the tariff paid to commercial, utility scale providers since last year’.
It’s one important rule of running policy: own your success! Don’t badmouth the beneficiaries of your own policy! If someone has benefited from your policy, present it as a benefit for the country, and present the revision you are seeking to make as the next step in the whole process of ‘going green’.
But our power sector bureaucrats are busy solving the wrong problem. Instead, they made the energy minister go public about his ‘fixed costs’, and made him present their transmission and distribution losses as a problem that the public needs to pay for. It is not the obligation of power consumers to pay for the minister’s ‘fixed costs’ or to carry his losses, especially if there is an alternative available to us.
Likewise the tax rebate. It is good that the cabinet and the IMF agreed to bring it back. But the suddenness with which it was discovered that this rebate is “omitted” and notices started being served on universities speaks to how a predatory culture has taken root in the tax bureaucracy.
How could they think they could simply serve these notices and start collecting taxes without raising very important questions about their own professionalism and competence? It is this impunity within which the tax officialdom operates and which presents a problem here. Both episodes are solved, for now, but let’s hope the higher-ups in the respective bureaucracies and their ministers will deign to derive some lessons from them. Taxpayers and power consumers are not lambs to be fleeced at will.
The writer is a business and economy journalist.
Published in Dawn, March 27th, 2025
