24-05-2025
- Business
- Business Recorder
Austerity for people, exceptions for state
EDITORIAL: In a country where every budget cycle tightens the noose on the ordinary citizen, the procurement of 179 vehicles — 15 of them fully bulletproof — by the Federal Board of Revenue (FBR) under the guise of reform is a stark reminder of how austerity in Pakistan has long been a one-way street.
The Planning Commission's call for a review of the Rs2.2 billion vehicle expenditure under the FBR's World Bank-funded Revenue Raises Project should not only be heeded, but broadened into a wider inquiry into why austerity only ever applies to the governed, never the governors.
The economic rationale of the Revenue Raises Project is hard to dispute on paper. A benefit-cost ratio ranging from 42 to 70, and an internal rate of return from 130 percent to 195 percent, are impressive metrics by any standard. But such numbers risk becoming academic if they come to justify unchecked spending cloaked in reformist language.
The Planning Commission is right to question how these 179 vehicles — procured without clear specifications and at an average unit cost of Rs12.5 million — fit into the broader framework of the government's self-declared austerity drive. Even the Finance Division, usually content to toe the fiscal line, has signalled concern.
The FBR has defended the procurement, citing the operational demands of varied terrains and the anti-smuggling mandate of its digital enforcement units. But here lies the problem: the state's definition of 'essential' is elastic — rarely subject to the same rigour or sacrifice demanded of the citizenry. Bulletproof vehicles and state-of-the-art tracking systems are evidently easier to justify than trimming allowances or merging redundant bureaucracies.
This tone-deaf spending is all the more jarring when set against the backdrop of an economy in distress. Pakistan's tax-to-GDP ratio remains stuck at around 10 percent, far below the Asia-Pacific average. A staggering 64 percent of economic activity remains undocumented.
Small businesses incur high compliance costs, while the cash-to-GDP ratio remains abnormally high at 28 percent, compared to India's 18 percent and Bangladesh's 17 percent. The structural tax reforms demanded by the IMF have already been extracted from the public through higher levies, indirect taxes, and repeated rounds of inflationary adjustment. Meanwhile, the state apparatus continues to grow in scale and insulate itself from shared sacrifice.
The Planning Commission's observations go beyond procurement excesses. It has rightly flagged the need to rationalise tax procedures, simplify the levy structure, and accelerate digitisation. These are the reforms that can make tax collection more efficient and equitable. The irony, however, is that a project purportedly aimed at achieving precisely these goals now risks becoming a textbook example of bureaucratic overreach and resource misallocation.
The FBR's vision is not without merit. Mobile tax facilitation units, ICT upgrades, and harmonisation efforts with provincial tax authorities are all welcome steps. But these goals do not require fleets of high-end vehicles and bulletproof assets as their delivery mechanism. Reform cannot be used as cover for profligacy. Nor should the promise of long-term efficiency gains grant a carte-blanche today.
The government's credibility on austerity is already threadbare. Each new commitment to fiscal discipline is followed by exceptions for politically connected departments, elite bureaucracies, or strategic pet projects. Until this pattern is broken — until austerity is practised at the top as stringently as it is enforced at the bottom — public trust in reform efforts will continue to erode.
The Planning Commission has done its job in raising a red flag. What remains to be seen is whether anyone in government has the political will to act on it.
Copyright Business Recorder, 2025
