South Asia Investor Review

As Pakistan's ruling elite and its ghairat brigade, led by PML's Sharif brothers, engage in loud empty rhetoric about infringement of their national sovereignty by the United States , here is something to ponder: Pakistan runs chronic budget deficits of around 5% of its GDP, and its government collects less than 10% of GDP in tax revenue which is among the lowest in the world. A big share of these deficits is funded by foreign aid and loans, making Pakistanis beholden to the interests and whims of major foreign donors and lenders. Pakistan's tax policies are among the most regressive in the world. Direct taxes make up less than 3.5 percent of GDP, with wide ranging exemptions to powerful segments of society coupled with governance issues at Federal Board of Revenue, according to former finance minister Shaukat Tarin . The bulk of the tax receipts are collected in the form of sales tax, placing the heaviest burden on the lower-income people who spend almost all of their in...

The return of democracy in Pakistan last year has once again put feudal politicians firmly in charge of the nation's affairs. Both major parties, the PPP and the PML, are heavily dominated by the country's biggest landowners, who are reliability voted into power by their poor landless peasants making up the majority of the electorate in Pakistan. British writer William Dalrymple has accurately described the politics in Pakistan as follows: "There is a fundamental flaw in Pakistan's political system. Democracy has never thrived here, at least in part because landowning remains almost the only social base from which politicians can emerge. In general, the educated middle class - which in India seized control in 1947, emasculating the power of its landowners - is in Pakistan still largely excluded from the political process. As a result, in many of the more backward parts of Pakistan the local feudal zamindar can expect his people to vote for his chosen candidate. Such ...

In spite of its claims to the contrary, the Bhutto family's private jagir (property) of Pakistan People's Party has been instrumental in preserving the feudal system in Pakistan, through perpetuation of its feudal democracy , controlled by the largest landowners in Sind and Punjab. Z.A. Bhutto's nationalization in the 1970s was the biggest culprit that stymied industrialization of Pakistan and the growth of the middle class, while it preserved the feudal system. Bhutto emasculated the industrialists who encouraged better education and skills development for workers for their industries, while feudal rulers continued to take their toll on the rural poor living on their lands who remain their slaves and reliably continue to vote their feudal lords into power in the name of democracy. The Bhutto era nationalization has left such deep scars on the psyche of Pakistani industrialists that, to this day, these industrialists are not willing to make long-term investments in big i...