Thu. Feb 9th, 2023

Taxing Gilgit-Baltistan: Part – I

Amir Hussain

“The ongoing political movement in Gilgit-Baltistan (GB) must be geared towards institutional reforms to ensure better governance and inclusive economic growth. The real issue is not about levying direct taxes, but it is more about reducing the dependence on the federal government and creating a competitive and investment-friendly business environment in the region.

“The poor people of GB have been paying indirect taxes like other citizens of this country and, therefore, the argument to link direct taxes with political representation at this juncture does not carry much weight. The direct taxes, if imposed, will be only a small portion of the overall ratio of tax collection in GB.

“If the protesters have any genuine issues to raise, it should not be confined to direct taxes, which are to be paid by the relatively better-off segments of the population. For the poor whose income is below the minimum tax threshold – less than Rs400,000 per annum – the ongoing anti-taxation protest promises nothing substantial.

“Political movements for freedom of expression and improving governance and downward accountability are the hallmarks of democracy and must, therefore, be allowed to flourish. But what is happening through this protest is not geared towards a progressive reforms agenda. The protesters are demanding a regressive socioeconomic and political order. These protests will impede the accelerated pace of ongoing development in the region without producing any tangible benefits for the people of GB.

“Instead of ranting about petty matters, businessmen, traders and nationalist and religious leaders in the ongoing protest should come forward to help the government devise a roadmap… of GB. We must not present our people as parasites who are dependent on the central government. Instead, we must exploit our abundant natural resources and tourism potential to come at par with the provinces and regions of Pakistan.”

The above paragraphs are directly quoted from the forward-looking and optimistic chief minister of Gilgit-Baltistan. In an hour-long meeting at his resident office in Islamabad, GB Chief Minister Hafeezur Rehman provided some insightful perspectives about the development roadmap of Gilgit-Baltistan.

In the backdrop of the ongoing protests in Gilgit against the decision to impose income taxes in GB, the chief minister appears to be talking sense. The people of GB pay indirect taxes worth Rs5 billion and the income tax may add revenues worth Rs3 billion, with another Rs2 billion from miscellaneous resources. This means that GB generates a total revenue of Rs10 billion annually, which is far less than the development needs of the area.

There are plenty of untapped resources in the spheres of hydropower generation, mining, tourism, stone cutting and horticulture. If these resources are harnessed, GB will not only be self-reliant but will also be able to produce surplus wealth for Pakistan.
According to federal and regional development and planning accounts, there are a number of mega projects that are being planned or are underway in GB.

“Tourism promotion and regulation initiatives are also some of the tangible initiatives, which can potentially accelerate the pace of prosperity in the area,” a government representative says. “With all the pitfalls – including the constitutional issues, the lack of representation and rampant unemployment – there is much to appreciate when we look at the development trajectory of GB. For the first time in its tumultuous political history, the issues of Gilgit-Baltistan have been in the limelight of [the] national development agenda, with a clear roadmap of economic transformation.”

These statements reflect the optimism of the government of GB. Their optimism certainly bears a semblance of political exaggeration. But there is an element of truth in what has been said above. The performance of the incumbent government in the region is far better than the performance of the previous government of GB.

I have interacted with the former chief minister of GB and noticed a marked difference between him and the current CM in terms of political acumen. As compared to the constituency-driven political approach of the former chief minister, Hafeezur Rehman provides a long-term vision for the region.

We may disagree with the current government’s political ideology. But this should not be a reason to dismiss its achievements. The political objectives of pushing for early harvest projects may be to secure electoral gains. However, this is exactly what drives the democratic process. The chief minister and his team appear to be serious in their efforts to push forward the development agenda of GB. They mean business here – at least this is what I was able to decipher from my hour-long discussion with the chief minister.

Contrary to our media culture of trading on political sensationalism, the anti-taxation movement in Gilgit-Baltistan couldn’t draw much attention from the mainstream media. Although it is a well-articulated movement in terms of its categorial stance to link taxation with the political representation, the media perhaps failed to understand the seriousness of this issue and considers it to be a boring affair.
“It is not sellable because it does not bring to the limelight some big guns of politics for talk show entertainment,” a senior journalist from GB says. “This ongoing political movement does not attract a sensational national debate and who cares if this does not [improve] rankings for media houses,” he adds.

The region-wide protests in recent days brought life in Gilgit to a standstill. Last week, a prominent leader of this movement said that the matter was not only about taxation but also provided an opportunity to voice the concerns of those who have been left out from the new prospects of development. According to the leaders of the anti-taxation movement, the disputed political status of GB makes it vulnerable to economic deprivation and exclusion from the potential opportunities offered by CPEC.

For them, development in GB will not take place unless its political future is determined under the constitution. For them, the imposition of taxes is the last thing to do if the government is serious about the socioeconomic development of this politically-marginalised region. According to a nationalist leader from GB, the government’s willingness to impose income taxes and withdraw subsidiaries on wheat and other items does not sit well with its claims of bringing prosperity in GB.

The government of GB argues that there must be a targeted subsidiary for the low-income population rather than attempts to feed the rich on taxpayers’ money. There seems to be an interesting debate going on between the protesters and the GB government. The beauty of this political movement lies in its ability to bring the government to the negotiation table. Credit also goes to the government for engaging the leadership of this movement in an informed and constructive debate that helps articulate a long-term development vision for GB.
The GB government has come up with suitable plans whereby proportionate funds are allocated from the national divisible pool to allow private investment for shared benefits and investment to improve the infrastructure for business and tourism. If this happens, we will be able to acknowledge the political virtue of being accountable to the people as well as the perseverance of protesters and a responsive government. All of them are critical for a well-functioning democracy. With these features built into a democratic process, we won’t need rebuking dharnas that tend to divert people’s energies from the real issues.
To be continued
The writer is a freelance columnist based in Islamabad.

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