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Dawn Editorial 25 June 2020

Diplomatic spat

PAKISTAN-India relations, already in the throes of an extended cool phase, have over the past few days deteriorated further as New Delhi has initiated a quarrel with this country, possibly to deflect attention from its internal and external crises. On Tuesday, the Indians asked Pakistan to reduce staff strength at the high commission in New Delhi by half. Pakistan answered in kind, based on the principle of reciprocity. Tension had already been increasing: on Monday two employees of the Indian mission in Islamabad returned to their country after they were involved in an accident in Islamabad, in which a pedestrian was hurt. Fake currency was retrieved from the Indians. A few weeks ago, two personnel of the Pakistan High Commission in New Delhi were declared personae non grata by the Indians. Foreign Minister Shah Mahmood Qureshi issued a stern warning to India on Wednesday, saying this country would respond with full force to any “misadventure”.
Regarding the scaling down of diplomatic strength, India has alleged that Pakistani diplomatic staffers were involved in “acts of espionage”, and has trotted out the old bogey of support for “cross-border terrorism”. Pakistan has denied these charges emphatically, stating that this country’s diplomatic staffers “always function within the parameters of international law and diplomatic norms”. Whatever India’s spurious reasons, it seems that those who call the shots in New Delhi have chosen to vilify Pakistan in order to deflect growing domestic criticism of the BJP-led government over its bungled handling of both internal and external problems. Like many countries across the globe, India has been hit hard by Covid-19, with hospital beds unavailable in major cities such as Mumbai and Delhi. On the external front, India has suffered an embarrassing rout in its recent skirmish with China along the LAC. There are growing calls inside India for ‘revenge’, and the response to the stand-off with China by the normally tough-talking Prime Minister Narendra Modi has been seen as inadequate, especially by the ultra-nationalists. Thus, in an effort to look ‘strong’, the Indian establishment has cooked up the latest crisis with Pakistan.
Regardless of the grandstanding of hawkish Indian elements, Pakistan should respond maturely to New Delhi’s provocations. The government has made clear that adventurism will not be tolerated, and extremist Indian hawks would do well not to beat the war drums. Meanwhile, despite the reduction in diplomatic strength on both sides, it would be wise to keep open unofficial or backchannel communications, so that animosities do not spiral out of control. Such efforts have worked in bringing down the temperature in tense times in the past. The message from Islamabad should be clear: while this country will defend itself against all hostile acts, it desires peace in South Asia, and will keep its lines of communication open in case India wants to talk.

 
 

Tax exemptions

NOT all tax exemptions — the indirect, off-budget expenditures governments accrue by removing or reducing assigned tax liabilities that a person or a business is required to pay on income, property or transactions — are bad. Policymakers everywhere use them to attract new investments in one or more sectors of the economy, support struggling businesses, develop infrastructure, help people or boost growth. Sometimes such exemptions are necessary to make a country’s tax regime simpler, more progressive and less opaque, and to reward compliance. But such concessions often become a drag on government budgets, undermine fair competition and discourage fresh investment, besides slowing down growth in underdeveloped countries like Pakistan. Why? Because the authorities don’t have the capacity or will to design tax expenditure in a transparent manner to affect firms’ investment decisions and fuel economic growth; instead, they cater to one power lobby or the other for various, including political, reasons.
Tax exemptions have always remained a popular tool for successive governments in Pakistan to shower favours on business lobbies for their support in spite of pressure from multilateral lenders to curtail these indirect expenditures in view of their impact on government budgets. A report by the FBR, Tax Expenditure 2020, estimates the total cost to the national exchequer of income tax, sales tax and customs duty exemptions allowed during the current financial year at Rs1.15tr. This is around 3pc of GDP and more than 29pc of the total projected tax collection of Rs3.9tr. However, the report doesn’t go beyond cost estimations and fails to analyse the impact of this huge expenditure on new investments, industrial output and economic growth. Indeed, some of these exemptions — like customs duty concessions on industrial raw materials or machinery — might have had a salutary effect on domestic industrial production and companies’ investment decisions. But without a cost-benefit analysis of each concession for the sector or firm for which it was meant, their continuation amounts to groping in the dark. For a developing country, it is never advisable to thoughtlessly allow generous tax exemptions; it is not easy to assess their economic impact or prevent their abuse by powerful vested interests. When and where it is necessary to allow a tax concession as an incentive for investment or for any other reason, it should be done in a transparent fashion — instead of shrouding it in secrecy like the Gwadar port deal — and after considering its potential effects on the economy and the business environment.

 
 

Unjustified detention

WHAT began as a farce is becoming more so by the day. It has been over 100 days since Mir Shakil-ur-Rahman, editor-in-chief of Jang group, was arrested by NAB in a 34-year-old property case in March. Since then, his bail petition has gone unheard with five bail hearings either cancelled/postponed for one reason or another. The first time, the bench was unavailable; twice, one of the judges was on leave; another time, a new bench had been formed and had not had time to read the case file. The most recent such hearing was on Monday; it was adjourned after a few minutes because some paperwork by NAB was missing from the file of one of the judges. Now the next date is July 7. The arrest itself was completely uncalled for. Mr Rahman had appeared before NAB for the second time to answer questions about the property in question — which the accountability body alleges was illegally leased to him by Nawaz Sharif in 1986 — when he was suddenly taken into custody.
It is an ordeal designed to test the patience and break the will of the individual at its centre. But as everyone in the media knows, this is about far more. It is about sending a message to ‘troublesome’ journalists and media houses who dare to question the modus operandi of powerful organisations like NAB, that such ‘investigative instincts’ could cost them dearly, where both revenue streams and peace of mind are concerned. Our dysfunctional judicial system further exacerbates the travails of the targeted individuals. All manner of outrageous accusations, including treason, have been levelled at journalists for doing their duty, simply because their work has threatened to expose the officially sanctioned narrative for being a sham. The state seems determined to grind down the media into a supine uniformity, all reading from the same script and peddling the same fictions. It should know there still remain journalists in this country determined to hold their ground in protecting their hard-won freedoms.

 

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