As much as we are different, in many ways Pakistanis and Americans are actually quite similar. Events this past week have revealed some of these similarities as officials in both countries unveiled new tax proposals.
In the US, the chairmen of the bipartisan National Commission on Fiscal Responsibility and Reform released their preliminary recommendations for addressing the American budget crisis. The package of spending cuts and tax increases represented a shared sacrifice to get the nation’s books back in order. It was met with shared howls of horror. I suppose one should be impressed with any legislation that unites the AFL-CIO and Americans for Tax Reform. But these groups agreed not only in their opposition, but their alternative solution as well — let someone else pay for it!
In addition to the debt commission’s package of reforms, the debate about whether to extend the tax cuts passed by President George W. Bush continues. Democrats insist that they should be extended only for “the middle class”, who they define as earning under $250,000 — a generous definition of middle class for a nation with a median income of $50,000, one would think. But the Republicans insist that it is most important to cut taxes for the wealthiest Americans.
Republican Congressman Darrell Issa said on Good Morning America last week that,”Tax certainty is important and it’s important for the investing class probably more than anybody else.” Tea Party hero Rand Paul explained further: “We all either work for rich people or we sell stuff to rich people.” I chuckled when I heard these quotes. In Pakistan we often talk about how we are still suffering under the yoke of feudal lords. Perhaps there is more similarity between our two nations than we think.
In Pakistan, as you well know, we recently suffered devastating floods of historic proportions. A fifth of our country was submerged and millions of people were displaced. The damages have been estimated at $9.7 billion. While the America was at the front of relief efforts, supplying vital economic, rescue and relief assistance, the fact of the matter is that the global response has been nowhere near what will be needed to rebuild after such massive destruction. That our national resources are largely occupied fighting a jihadi menace that carries out regular and deadly attacks against our schools, mosques, and government means that we do not have the luxury of extra resources with which to adequately address the needs of those affected by the floods.
In order to address this need, President Zardari and the Pakistan People’s Party (PPP) asked the wealthiest citizens to pitch in to shore up the nation’s bottom line. Government officials introduced a proposal for a Reformed General Sales Tax (RGST). The proposal includes a 1 percent tax increase on non-essential luxury items, and a temporary 10 percent surcharge on income over Rs.300,000. To protect the poor, items such as wheat flour, vegetables, fruits, meat, mutton, poultry, health services, institutions providing educational services as charity and non-profit organisations are all exempt from the tax.
Nevermind that the median income in Pakistan is around Rs.80,000 or that, with a 14 percent unemployment rate and a 25 percent of the population living below the poverty threshold, even Rs.80,000 is likely an inflated middle income — the government’s tax proposal was met with similar outcry to protect “the middle class.”
Pakistan’s wealthy conservatives, much like their counterparts in the US, claimed that any tax on the wealthy would simply be passed down to the poor in the form of price increases, despite the exemption of essential items. Some conservatives have warned that the price of sugar could skyrocket under this new tax plan. I suppose they would know, as their families own some of the nation’s largest sugar mills.
So perhaps there is another similarity between America and Pakistan. While our infrastructure crumbles, our economies decline, and our people are left without jobs and homes, at least we will both continue to have our tea parties.