The phrase ‘It’s the economy, stupid’ was coined in 1992 by James Carville, a campaign strategist on Bill Clinton’s successful White House bid team, who saw the need to make the US recession into a major election issue and carried the day. Clinton campaign staffers were told by Carville to hammer in the message at every opportunity to underline their stance that the incumbent, president George Bush, was out of touch with reality and incapable of setting the economy right, even as the economy had, in fact, turned the corner. The economy was coming out of recession and had posted several consecutive months of growth, but the Carville-authored Clinton campaign mantra worked wonders.
Clinton took 370 electoral college votes to Bush’s 168. Breaking a three-term run of Republican presidents, he also won the popular vote by a margin of nearly six million votes. This, despite George Bush’s approval rating running at a staggering 89 per cent, as the president had just prosecuted a successful war in the Middle East and kicked out Iraq from Kuwait. The lesson in this campaign mantra win was that of all political slogans, the one that targets issues related to the electorate’s pockets will win, unless there is an issue often transient in nature that dominates an election on a one-off basis.
The reference here is to elections in more developed democracies where, apart from winning over voters with legitimate or, as has been witnessed in recent years in the US and UK particularly, manufactured issues, even messages of hate, there is little else to influence electoral outcomes. The military, the security services and the judiciary are not seen running parallel campaigns — subtly or blatantly, manipulating election results and undermining elected governments with a mandate and sending prime ministers packing or worst still to the gallows. This has weakened democracy and the democratic dispensation to the extent that ‘elected’ parliaments and prime ministers and their governments have publicly conceded their helplessness in even addressing issues such as enforced disappearances of dissident political activists.
Elected parliaments can’t even legislate to ensure the basic right to life and liberty of citizens. Let alone that, they can’t even forcefully say that someone accused of having committed a crime should face the charges in a court of law and not go missing. In Pakistan’s case, geography, ethnicity, location, bad timing and a range of similar factors seem sufficient grounds for the midnight knock and someone’s disappearance from the face of Mother Earth without a trace. The long-term effect of such pain, brutality on the traumatised family, friends and society at large is beyond the scope of this column.
Mental health experts have written volumes that are in the public domain and easily accessible, if anyone at the helm is interested. This is an issue that does not seem to be on the priority list of anyone in the corridors of power. In our experience, the matter receives some attention from those aspiring to power or nearing it, but once they are home, it is left at the door. Many politicians privately argue that given the ground reality in our beautiful, yet blighted country, they can’t really push very far and hard as they would run the risk of upsetting the apple cart and losing whatever few democratic gains there have been after years of struggle.
Even if democratic gain was their solitary rationale, it would be a faint, weak one for what good is a ‘democratic gain’ if the citizens can’t even be assured of their right to freedom of expression, and their liberty is threatened by the state itself? For a moment, let’s say the politicians are indeed hamstrung by extra-parliamentary forces. Are they, truly, free of blame themselves? International banker, author and economic analyst, Yousuf Nazar, who happens to be my cousin, argues that is not the case. Pakistan’s present government is asking the people to make huge sacrifices to stabilise a near-bankrupt economy by raising energy prices in line with the global price escalation (which has spurred over 20 per cent inflation), raising personal income taxes of the salaried classes, and levying a 10 per cent one-time super tax on industries making multiples of billions in profits.
Against this backdrop, Yousuf Nazar looked at the published figures of the taxes paid by the parliamentarians themselves. The summary analysis of incomes and taxes paid by MNAs for the tax year 2019 showed shocking details. On an income of 312 MNAs totalling Rs 9,575 million, the effective tax rate, that is at which income tax was paid, was 4.28 per cent. The rate was even lower at 3 per cent for those claiming a part of their income from agriculture. The highest-earning MNA paid tax at the rate of 7.5 per cent of his declared income of Rs1,876 million and the lowest rate of tax turned out to be 0.7 per cent on an income of Rs 146 million. This range of tax rates from 7.5 per cent to 0.7 per cent was reflected in the cumulative effective rate of 4.28 per cent.
The easiest and safest tax haven is ‘income from agriculture’ and is more or less tax-free. If anyone had the will and tasked a seasoned investigator to look into this, rest assured billions of non-agricultural income would also be found sheltered here. In any case, not taxing income from agriculture that accounts for over 20 per cent of GDP is mind-boggling. Whether it is a provincial tax or federal is only a matter of detail. Untaxed agricultural income, alongside debt-servicing, the sacrosanct defence expenditure and subsidies to the ultra-rich, leaves very little leeway in the hands of the country’s financial managers. Our very own mantra ought to be: It’s the elite capture of the economy, stupid. All else is no more than a red herring.