The dismal economic conditions affecting the majority of the people, the growing chasm between the government and the discontented masses, divisive elitist politics, and rising militancy and violence have enhanced internal security risks.

The earlier successes achieved by the military in subduing fanaticism have not been consolidated by economic development that could bring peace and prosperity to the areas devastated by armed conflicts. And so many precious lives are being lost.

The situation, however, is marked by a positive development; the senseless killing of innocent men, women and children is triggering loud protests by scores of thousands of helpless people in the areas hit by terrorism. It indicates the Taliban’s faltering grassroots support in its heartland despite the suspected patronage of invisible forces.

The nation is paying a heavy price for keeping the country’s predominantly tribal and feudal belts economically, politically and socially backward. The belt has been the primary breeding ground of extremism. Nor does the insurgency in Baluchistan seem to be petering out.

The larger distance between ordinary citizens and the government is one of the primary reasons for governance failures, says analyst Abbas Moosvi in an article titled Enough Tinkering at the Margins. He is a research fellow at the Pakistan Institute of Development Economics.

Pakistan’s property tax revenue can increase to Rs400bn from the current Rs20bn if local governments are empowered enough to directly benefit locals

The problem is being made worse by stagflation and there is a need to strengthen the income support programme and financing of resources, an uphill task for the government. Spending on Benazir Income Support and other income transfer programmes needs to be increased from the current less than 0.5 per cent of GDP, says former finance minister Miftah Ismail. According to one estimate, the overall proposed amount can only be met by realising the potential revenue of property and agricultural income tax.

The present state of discontentment with the government could be mitigated if public goods and services of everyday use become available at the grassroots level, says former chairman of the National Commission on Governmental Reforms Dr Ishrat Husain. “Build the trust of the people in the government and lower the degree of dissent.”

For political parties to gain ground at the grassroots level, an effective (representative) local government system needs to be introduced, which expands the political reach and reinforces policies for local decision-making through local solutions to local problems, says Senior Police Manager and Supervisor and a Fulbright scholar Faisal Ali Raja.

The killing of innocents is triggering loud protests by thousands of helpless people in the areas hit by terrorism, indicating Taliban’s faltering support in its heartland

Suppose the local body governments are genuinely empowered. In that case, Mr Moosvi says, the quality and effectiveness of service delivery are likely to multiply manifold if/when prospective leaders are directly accountable to their specific (electoral) constituencies and know that their prospects of returning to power in subsequent terms are exclusively contingent upon their merit rather their ability to engage in politics of patronage.

After gaining experience in managing and solving problems, local government leaders can tackle the issues when they reach the provincial and national governments. In this way, Dr Hussain believes that the political parties will be able to meet the electorate’s expectations.

Article 140 of the constitution stipulates that political, financial and administrative authority be devolved to the third tier of government so that they function effectively.

From the national perspective, Dr Hussain says devolution will result in efficiency, accountability, resource mobilisation and better resource utilisation. The generation of revenues can rise significantly if, he suggests, taxes such as agricultural income tax and urban property tax are devolved to the third tier of government and if the system for collection of local taxes, levies, fees, charges etc, is revamped.

Currently, the ratio of property tax in Pakistan is 0.3pc while the average for developing countries is 0.6pc. Studies have shown that Pakistan revenues can increase at least to Rs400 billion annually from property tax if necessary tax reforms are conducted and the responsibility for assessment, collection and enforcement of property tax is shifted solely to metropolitan corporations and municipal corporations. Under the existing system, the total collection from all cities is merely Rs20bn annually, whereas Mumbai Municipal Corporation collects Rs120bn.

Similarly, agricultural income tax (AIT) collection was merely Rs3bn annually when the agricultural gross value-added in 2020-21 was Rs15tr. The real effective tax rate turned out to be 0.005pc against 2.5pc of the non-agricultural sector. The potential AIT is estimated at Rs375bn or 0.5pc of the GDP per year.

Thus a financially, administratively and politically empowered local government could mobilise and utilise revenues for extending essential public services to the citizens, concludes Dr Hussain.

Functioning effectively, the democratically empowered local governments can help regain grassroots support for much needed national unity and economic stability to safeguard the country’s internal security.

Published in Dawn, The Business and Finance Weekly, February 13th, 2023