‘Nationwide protests’?

It seems the mainstream press is finally waking up to the social implications of the new tax regime. So far it’s happily provided uncontested coverage of the recent rate cut and the bubble in the stock market, never questioning nor even wondering about which way interest rates and the market will go once the IMF programme’s “upfront conditions” begin to bite.

This week, though, an editorial in Dawn – Ballooning bills, 6 July 2024 – warned that a “second cycle of nationwide protests and agitation against the ballooning price of electricity will start soon”. Long story short, tariff revision is just one of those many “upfront conditions”, which will inflate utility bills and push the already horribly taxed middle- and lower-income classes right over the edge. But there’s more.

The press ought to highlight also that high cost of energy will reignite cost-push inflation just when the state bank is turning dovish after years, cripple the similarly horribly taxed industrial sector, force job losses and drive yet more people into utter desperation. It must also remind everybody that this is happening in a country which has the world’s fifth-highest population and figures right at the top in global poverty and illiteracy indices. To make electricity, gas, water and eventually even food and water simply unaffordable for millions of people in this environment is the textbook recipe for creating a social nightmare.

But most of all, the press is still criminally silent about the fact that all this is being done deliberately. Everybody understands that the country will default without an active IMF programme, and it will come with very harsh “upfront conditions” that will tax the country to the bone. But the new finance minister, at least, seemed to realise that the desperate need for more fiscal space meant that the four sacred sectors – agriculture, real estate, wholesale and retail – would finally have to be taxed. But it turned out, at the time of the budget, that he didn’t.

Anybody who’s run headlines out of a newsroom for a few years will tell you how every new ‘parachute’ finance minister makes this same claim all the way to his first budget, but then bows to political pressure at the last minute. You just do not tax the feudal and industrial elite that rules this country, nor their friends in trade and property; not if you want to keep your job and the glitter, glamour and international connections that come with it. That’s why even though I have learned it is not wise to make predictions about policy, I still dared to call the banker-finance minister’s bluff in this space when he first said those words.

And he didn’t disappoint. All that experience in local and international banking and finance and his prescription is to tighten screws on existing taxpayers even more tightly than his predecessors! And not only do the biggest, most bloated and best-connected sectors stay protected from the tax net, government officials and parliamentarians get more salaries and more perks and privileges while the private sector, the urban middle class, and lower income groups are made to pay pound after pound of flesh to save the country.

Yet I’m surprised to see these pages still quoting experts and former very senior officials of top institutions calmly predicting a “downward trajectory” for interest rates, a stable rupee, and a “stabilising economy”. It seems nobody’s considering the very basic fact that when poor people see their bills rise by 40-50 percent, a lot of them simply cannot pay them, and the inevitable outcome is social unrest on a very large scale.

The caretaker government got a taste of this when people got their electricity bills for last August and poured onto the streets. That’s when the information minister made a clown of himself by saying that they called the IMF to revise the tariff, but it was night time in Washington so they didn’t take the call. Now the plan is to do the same to people, more and more, month after month. That’s sure to raise prices across the board and, just as the editorial warned, trigger nationwide protests.

The press must also warn that history will look back to his fiscal year, and hence the celebrated banker-minister’s first budget, as the time when painful structural reforms under a critical IMF programme could have saved the country. But its rulers, forever in denial, refused to create additional fiscal space, kept their friends and cronies protected, and deliberately piled more pressure on honest, hardworking Pakistanis than they could bear.

Copyright Business Recorder, 2024