Limits of charity
THE coronavirus pandemic, which has ravaged many a developed country thus far, is fast exposing the frailties in Pakistan’s threadbare healthcare apparatus as well as our broader economy. Amidst this crisis, however, many have taken heart in how it is bringing out the nation’s altruistic side, and how many more are selflessly contributing to the host of charity drives being organised by myriad individuals, businesses and nonprofits.
After all, Pakistan ranks high amongst nations in terms of generosity. According to a recent piece in the Stanford Social Innovation Review, Pakistanis contribute as much as a per cent of GDP annually towards charity. This is comparable to many developed countries. The corresponding figure for the UK is 1.3pc and 1.2pc for Canada.
But while it is indeed heartening to see such generosity during this latest predicament and such giving is crucial for the sustenance of the millions already facing abject poverty, we have to realise that private philanthropy has its limits — particularly during a pandemic.
Many of the citizen-led charity drives springing up right now are uncoordinated. Their effectiveness is hampered by information asymmetry whereby multiple efforts could target the same areas. Citizen-led donations often have a large urban bias. But remember that the rural areas are also reeling from the economic fallout of the present situation, even if the reported numbers of infected people in rural areas are lower.
Only the government can tackle a crisis of such scope.
These impromptu charity drives are also fairly limited in scope. A bag of ration can only last a few weeks. Meanwhile, our government departments, notwithstanding their general ineptitude, still maintain the widest infrastructure to respond to such crises to not only reach the most marginalised communities but to do so in a coordinated and sustainable manner. Only the government can tackle a crisis of such scope — for instance, the Edhi Foundation’s annual budget of roughly Rs1.5 billion pales in comparison to the government’s latest Ehsaas Relief Programme which aims to dole out Rs144bn to 12 million recipients over the coming four months. This is not to belittle the efforts of the many citizens risking their lives to help others, but rather to demonstrate that government-led social transfers can be more effective than anything organised by civil society, especially amidst a crisis like the current one.
So it is no surprise that the efficacy of government responses has been a major determinant of how well countries across the globe have dealt with the pandemic thus far. Private philanthropy can and should be a worthy supplement to public spending during such a crisis, but it cannot and should not be propped up as a substitute. Even Milton Friedman, the prominent conservative economist and advocate of lower government spending once wrote: “It would be nice if we could rely on voluntary activities of individuals to house and care for the madmen. But I think we cannot rule out the possibility that such charitable activities will be inadequate.”
So what Pakistanis, especially the more privileged ones, need to consider is how to improve the government’s capacity to effectively respond to such crises, going forward.
A primary mechanism of improving the government’s capacity to tackle such crises would be to provide it with more fiscal muscle by addressing the woeful overall tax-to-GDP ratio. This can be done by not only improving the tax bureaucracy to ensure better collection of existing taxes but also widening the tax base. The tax base can be widened by adding both new taxpayers and new taxes. Such efforts should prioritise direct taxes in sectors of the economy that are scarcely taxed presently — capital gains on immovable property and agricultural income come to mind. The agriculture sector contributes under a per cent of all tax revenues despite accounting for a fifth of the country’s GDP.
Raising our measly tax-to-GDP ratio, though, will prove to be easier said than done — as has been the case thus far whereby, despite multiple efforts by successive governments, the country’s overall tax-to-GDP ratio has hovered around 10pc for decades.
Ultimately, Pakistanis, especially the more well-to-do ones, need to realise that we are only as strong as our weakest link, the most marginalised in our society. So, while we should cherish our compatriots’ generosity in these troubling times, we need to urgently coalesce around widening the nation’s tax base to strengthen social safety nets. This is the only way we can collectively deal with not just the impact from the pandemic but also other ongoing crises such as climate change (Pakistan regularly features among nations that are most vulnerable to climate change’s onslaught) and food poverty (40pc of Pakistani children were stunted even before the pandemic hit).
The writer is a Washington D.C.-based policy analyst.
Twitter: @paharibakra
Published in Dawn, May 6th, 2020