The Sugar Coated Shaft

NazarHayatKhan #24: You are correct. However, what rate is it taxed at? What parts of it are taxed? And most of all, how does the tax grow as the amount of land gets larger and larger?

``Musharraf may be blamed for many other evils but these two guys have bailed him out at least on the economic front.``

Any leader, be he elected or a dictator, has to do just two things: provide jobs for the people and provide security. This is specifically true for poor countries. These are the only two evils that are important.........

This is it. Everything else is a much smaller, and in many cases irrelevant concern for the overwhelming majority of the people of a poor country. The miniscule minority that discusses other issues, like religion, secularism, democracy, foreign policy, culture, entertainment belongs to the group that already has jobs and security. And already has one or both feet outside Pakistan (the chowk crowd). They (we) are not important, and are actually the beneficiaries of the status quo corrupt system of Pakistan. Our concerns are immaterial, in the big picture.........

Take any survey of Pakistan and the top concern will be jobs and security. In fact, take the survey of any poor country and these will be at the top. Look at Maslow`s hierarchy.

To deliver on these two issues, a leader, again be he/she elected or a dictator, needs to find the best possible and honest men/women in or of his land in these professions, put them in positions of power, and create an environment where they can operate without hinderances........

That`s it. That, in a nutshell is how a country progresses...........It is not rocket science........The country with the best economic plans, which are executed efficiently, will be ahead. Doesn`t matter who is running the country. Doesn`t matter what it is doing anywhere else. Not even the individual running the country, be it Musharraf, Benazir, etc. matters.

All Pakistan needs is for the current economic team (Ishrat, Shaukut, Hafeez etc.) to get another ten years to execute their plans..........And we are all set...........That is what Singapore did, Korea did, Malaysia did, Taiwan did, and China did........Not because of democracy or anything..........Even India has started to turn around, not because of 50 years of elections. But because an economist finally after 40 years, put in good economic policies.........Had it been elections, India would have turned around in the 50s.........

So poeple should forget about Musharraf...........And just look at who is running the finances of country...........And as I have been saying from day one..........These guys are top-notch and very patriotic and honest...........They will deliver, and have delivered.....

Ten years of 6-8% growth for Pakistan........That is what I am looking for.......If Musharraf (or anyone else) can even deliver five years of such growth, while the elitist will hate him, his picture will be on the back of every other rickshaw in Pakistan.........

Romair # 7

(The day all that land is brought under taxation, is the day Pakistan will start filling its coffers, considering the fact the Pakistan is an agricultural country............. )

Agriculture is taxed in Pakistan. I can show you the Tax receipts of the Agriculture Tax that I have been paying. I do not know why this misnomer exists that Agriculture is not taxed.

Full Marks to Ishrat (State Bank Boss) and Shaukat for their last few years of work.

Musharraf may be blamed for many other evils but these two guys have bailed him out at least on the economic front.

nhk

re: Shakir Husain

I would have to disagree, with you.

I think that I am more inclined to agree with what HP and Godot have suggested.

Budgets in developing nations stricken with a host of problems, cannot be populist in their overall intentions. It has taken nearly six years to stop the down slide of the Pakistani economy and to stabilize it. The next step would to be implement the next generation of economic reforms and to continue to work on the macro, but more importantly on the micro indicators of the economy. Budgets, which favor the industry over the population, will be the norm for the immediate short term future, say 3-5 years, because the idea is to support those areas of the economy, which are spuring the growth and adding revenues to Pakistani coffers.

Pakistani economy has to be privatized and we have to clear the mess created by Z. A. Bhutto and his socialist visions of economy, which had nearly sounded the death knell of Pakistani economy. As the economy develops and grows, there will be a reinforcing of the middle class, which is already visible, but still needs to grow before it can sustain the economy on its own purchasing power. The urgent need is to create an industrial growth, whose ripple effect shall translate into a ``trickle down`` benefit to the average person.

There is a viable trickle down effect in Pakistan and I am saying this by comparing my own experience of Pakistan today, with what I had experienced nearly twenty years ago as a teenager. Things have improved and they have improved dramatically in the last 3-4 years. I am basing this observation on my own purchasing power. I can, today, afford things, which my parents considered as luxuries. For example, when I first got a cell phone connection, it cost me nearly Rs. 5000 in connection fees/governmentment taxes. Three years ago, not everyone in Pakistan could afford a cell phone connection and now, the cell phone is now within each of an average Pakistani.

I agree, that that this is not a ``people friendly`` budget but then again, no budget is ever ``people friendly`` when the idea is to earn money from domestic sources without reverting to the proverbial begging bowl of IFIs. The next few budgets will continue to be painful, because as the economy improves, the process of the documentation of the economy will continue and sooner or later, capital gains tax on property transactions will be implemented. The idea, at the present, is to hopefully sustain the economic growth in Pakistan at the prevailing rates, if possible, and not to depress the economic activity, which is fuelling the economic growth in the country through the imposition of curtailng taxations.

I am not entirely certain, why you have such a negetative view of the economic growth in Pakistan unless your comparsions are themselves unrealistic. I cannot compare my life style, with the life styles of the ``one percent minority in Pakistan``as you seem be be doing and hope to be enjoying the same socio-economic status. I will never have their economic purchasing power no matter if the economic benefits trickle down or casade downwards over my head! If, I were to compare myself with the one percent of the Pakistanis, I could also claim that I have been left out in the cold by the economic boom in Pakistan. However, if I were to compare myself and my socio-economic status, over the last five years, I would discover that it has actually improved. The lot of the middle class has actually improved under Musharraf and his economic team and in all fairness, credit must be given where credit is due.

We, Pakistanis, need to learn to seperate our political personal interests from the economic interests of the nation and learn in the process, that it is alright to blame Musharraf politically but credit him economically. We cannot be myopic and we should not endeavor to ruin this economic growth because we do not like Musharraf. Even when the Devil does good, we must aknowledge the fact and when democratically elected leaders do bad, we must point out their mistakes. It seems that it has become our wont to cheer when things are bad and to critize and moan, when the things are improving, as your article seems to suggest.

My humble and simple advice to you would be; be realistic and stop dreaming and stop comparing yourself with people, who do not belong to your economic group. Comparsions should be based on similarities and not dissimilarities and your article, was a case of sour grapes, because as much as you complain about the life styles of the rich and famous, you seem have to a wish to belong to that life style. There is nothing wrong with wishing, but wishes do not necessarily make reality and the reality is, when our wishes are found to be wishful, we should not blame the reality because our wishes were not fulfilled!

Ciao

Re# 19

Dear Ahmed,

GDP growth can be expressed in two ways- on real basis i.e. adjusted for inflation or nominal basis i.e without adjusting for inflation. When ur FM says that the economy has grown by 8% he means growth at real terms. In your example if inflation was 11%, nominal GDP growth would be around =(1.11* 1.08)-1 =19-20% while real GDP growth would be 8%.

Regards

Shakir,
nice writing.

`Mssrs. Aziz and Ayub, I do have one question though. Why hasn’t any real estate transaction been taxed in this budget? Could it be because everyone in Islamabad is heavily involved in the real estate business? Could it that files are being bought and sold by the mighty of this land that they don’t want their names disclosed ?
very good question.

Um! I don`t see why some of you smart guys continuously criticize General Mush and his buddies! Why not give him some credit for preventing the country sliding into civil disorder , corruption and chaos. He gave lots of stability until better times to come.

His information minister recently has made clear that the General will not run when the present term runs out. So have patience. Rome was not built in aday!

I have question about econ0my indicators. I have not much knowledge so anybody can answer.
According to PrimeMinister the economic growth was 8%.
The govt. Bank officials say inflation was 11.5%. Chember of commerce and other put at 15%.
Does it means economy is shrinking as growth- inflation= 8-11.5=-3.5%
As I understand PM is banker and he is very happy for economy so things are doing better.
Can any body explain me in simple words why this is better. ( -3.5% is shrinkage)

Not taxing real estate is prudent move. Presently other than textile there is no incresing business sector ( except textile export and Real estate). It will be wrong to tax and discourage investment ( or speculation depending upon point of view ) and destroy only major sector which is growing very fast.

Less taxing is better ( weather industry or agriculture) in every way. I feel tax evasion is illeagal but is beneficial to society. The govt collected money is wasted anf lost in corrouption.

I hope some body will explain the contradiction in simple words as just like myself many may be wondering . Thanks.

should we spend for the betterment of the textile industry for the future `Pakistan` or should we spend on education and infrastructure for the betterment of the future `Pakistan`
We need a solid base..when the basic problems or requirements of people are not fulfilled in Pakistan , then to hell with the textile industry. Japan and America are different cases. They did not suffer from a corrupt society and they wernt unstable. We , we are a different story. Like I said before , we need to get our priorities right. People and education come first , then comes the *textile industry*....yeah night haroon..RUSTAM* haha

I stopped on the American example since alot of other factors would be involved and the direction of the debate would be taken off the mark.

Honestly, how naive can you be to suggest that we not think about the textile industry?

All we need is JOBS.

Japan and her cost-effective automotor industry had so badly crippled the American industry that the U.S was considering to place additional duties on their produts and taken `precautionery` measures(1970s`80s). However, the crisis was resolved when Japanese companies agreed to set up factories in the U.S..

We must side with the lesser of two evils. We dont have the domestic capabilities to produce our own cars yet, however the one we are producing, only 65% of it is produced within Pakistan.

Jobs are the need of the hour. The wealth WILL and the wealth MUST trickle down to the masses!

``Haroon Ellahi.. what you talk is what every rich man would say to justify this budget as it is highly beneficial for your class of people. ``

Well, as long as you look out for your interests without breaking the system it`s all good. It`s a capitalistic society isnt it? Besides, I enumerated why I felt most of the budget was a good idea.


``However, you are forgetting that your class of people even though is the ruling elite, it still is a very minute fraction of the total population of Pakistan.This minute faction does control most of the bureacracy,judiciary and politics of Pakistan and so to please them is to please Pakistan.But do not forget, where 5% of us benefit from this budget because we can buy the latest mercedes now , the other 95% have once again been left with nothing but increasing expenses and less employment.``

There is no dispute on the fact that a collection of families in Pakistan and the military heavily influence and control our instititions, that never was in dispute and it`s implied, so I don`t even see it as a point. I never spoke on the issue of the latest mercedes, since I felt that they should not have slashed duty taxes on cars assembled abroad. However, Mercedes, along with alot of other car manufacturers are considering on setting up plants in Pakistan ,that will definately be providing us with jobs and employment. BMW is doing that I believe and the government is pushing Honda and Toyata to now start creating their parts within Pakistan too, that is a great victory for our industrial base and production capabilities.

``It is very easy for us to formally sit state that this budget is very `people friendly` while it is very hard for an average poor man to survive in this time where prices or everyday groceries are sky rocketing.``

The removal of the sales tax will assuage their situation. Also, the government is supporting the creation of jobs at the mass level, just look at the pace our economy is growing. Jobs for the masses! I think you and the author fail to understand that changes in the socioeconomic landscape of a country do not take place overnight, it is a long, multi-step process.

``We all need to get are priorities right. And my advice to you Haroon , please come out of your textile industry and try to maybe look at practical life from the eyes of an average Pakistani who does not have the privelage of posting at chowk.com because after he spends on tomatoes , potatoes , wheat , sugar and other basic necessities of life , he is left with virtually no money to educate himself or the people around him.``

My sympathies for those Pakistanis who have not been blessed with the privileges I have been. But buddy, just READ what you are saying. ``We all need to get are priorities right. And my advice to you Haroon, please come out of your textile industry and try to may be look at practical life from the eyes of an average.........`` For the love of god, Do you know the fact that over 60% of our foreign earnings and revenue comes from the textile industry!?!?! How can you ignore the textile industry? Throughout history, the textile industry has been very important and we do indeed have a comparative advantage in it. Our archilles heel is that our ginning processing capabilities and stand of qualities have not upgraded and enhanced them selves at the pace the weaving and spinning sector has!
I always have, still am, and will always continue to look at our problems from the prism of massive industrialization of society.

The United States of America would never be where it is today had not the massive industrialization taken place there, coupled with the creation of an advanced railway network system. timmmmyyy, you have been owned. See you rath ko! :)
Jobs! Jobs! Jobs!

Jang, It`s Islamabad.

Haroon Ellahi.. what you talk is what every rich man would say to justify this budget as it is highly beneficial for your class of people. However, you are forgetting that your class of people even though is the ruling elite, it still is a very minute fraction of the total population of Pakistan.This minute faction does control most of the bureacracy,judiciary and politics of Pakistan and so to please them is to please Pakistan.But do not forget, where 5% of us benefit from this budget because we can buy the latest mercedes now , the other 95% have once again been left with nothing but increasing expenses and less employment.It is very easy for us to formally sit state that this budget is very `people friendly` while it is very hard for an average poor man to survive in this time where prices or everyday groceries are sky rocketing.We all need to get are priorities right. And my advice to you Haroon , please come out of your textile industry and try to maybe look at practical life from the eyes of an average Pakistani who does not have the privelage of posting at chowk.com because after he spends on tomatoes , potatoes , wheat , sugar and other basic necessities of life , he is left with virtually no money to educate himself or the people around him.

real estate pricing are very interesting. mortgage banks have figured out that a family can own a home costing 3 times their annual clear income (i.e post-debt servicing) as a sustainable affordable cost. how does the per-squarefoot rate in islamabad etc compare? i can say that in bombay, a young prefessional 2-income family pulls-in about 2-10 lakh rupees, and aspires for 15-30 lakh apartment. the 2-lack folks put a larger down-payment. in places like gurgaon and bangalore, the real-estate is more exotic, with an IT family income hitting 10-50 lakhs. these real-estate deals are all white-money, bank-mortgage based...with post-tax down payments. how does real-estate pricing compare to incomes in isloo etc?

The prices of the domestically produced synthetic fibres are way too high and their quality is far inferior to their cheaper counter-parts. This will help us because we will be able to weave and spin better quality finished products! We need to do every thing possible to maximize our capabilities in the post WTO-quota regime!

i have to agree with most of shakir hussain`s observations.. there is major bullshitting involved in this new budget..rich gets richer..poor gets poorer..and yes..the party does go on..

Shakir Husain, the import duty on synthetic fibers use to be at 15% I believe. Now it has been slashed to 6.5%. We need to take all measures possible to make sure that our compartive advantage in the textiles industry stays with us and that the textile industry continues to create high-quality products and that their total costs are reduced. This will help the products our textile industry makes and it will also result in additional profits for them. The money saved can eventually be compiled with other resources to further enhance our capabilities and standard of quality by purchasing equipment from abroad.
Also, the abolition of the sales tax is a progressive step. It`s not like it`s honored any ways. The business community will have additional funds in it`s pockets to create more industry and hence that will directly and indirectly provide more jobs to the People of Pakistan.

Did the budget talk about the ginning sector at all? I was not able to hear the budget speech and I can`t seem to find a copy of the text on the internet. Would any one be kind enough to provide me with a link if they have one?

I think the intent of the article was more on berating the government as opposed to taking part in a constructive dialogue.

Also, I have taken into account that a great degree of factionalism and sectionalism exists in this country. As in, all countries suffer from those great ailments but perhaps Pakistan suffers the most from it. Is the author aware of the fact that so much economic activity has taken place by the land-development projects taking place in our country? Directly they have created so much labor and indirectly they must have created 10x more. the introduction of such a tax on the property prices would definately discourage the existing parties and deter other parties in the future from taking part in land development projects.