Originally published in theWire.in
An editor of an Urdu newspaper once told me how the discourse in Pakistan’s English press is detached from the needs of the ‘common man’.
The gentleman justified the paper’s pro-establishment editorial policy saying, “it is impossible to explain the nuances of Pakistani politics to a fruit hawker.”
Implicit in the remarks (hypocrisy aside) was the assumption that Pakistanis are irrational people which means, they must be told what is right.
Are Pakistanis really so irrational?
I can see why one can be inclined to believe so.
What else explains why they continue to skive off due share in tax? More taxes mean more funds for development.
Online campaigns questioning the ‘patriotism’ of some Pakistanis are common. Often, those who reside in Pakistan are considered more loyal as they have an innate (read irrational) love for the motherland. And those commenting from overseas are considered traitors as they have an irrational prejudice towards it.
However, the assumption that Pakistani citizens are incapable of reason reeks of elitism.
A collective action problem
A key concept of governance is the ‘collective action problem’. Such problems occur because of common goods in a society that everyone benefits from regardless of the effort society members put in to attain those goods.
An example of such goods is water. It is available for everyone residing in Pakistan where there is infrastructure. Rational Pakistanis freeride – they aim to have others pay the costs of providing water from which they then benefit. The cost can be borne by others by paying a water tax, reducing consumption of water even as others maximise it, having no water supply and so on.
The consequence of this problem is that if everyone thinks rationally and nobody works to provide the good, it is not attained. This leads to water scarcity.
Therefore, the outcome of our rational attitude is wholly irrational.
We can also bring this problem to bear on the on-going revenue drive. In theory, all Pakistanis residing in Pakistan will benefit from a higher development budget if everyone pay their due share of tax.
However, rational Pakistanis would aim to freeride – get away with as much undeclared wealth as possible, minimise the effort and cost of regulating their businesses, avoid the perceived risk at present of investing surplus revenue, etc.
The outcome of a rational response to the tax drive is that the government’s revenue targets will not be achieved.
A matter of perception
Dealing with collective action problems is also a matter of perception.
The contribution of any individual Pakistani to the overall benefits of everyone paying taxes is statistically rather low; the amount of benefits each Pakistani reaps are almost wholly unaffected by whether or not they pay their due share.
For instance, an opposition politician paid an agricultural income tax of Rs 3.83 million in 2017, according to the documents she submitted to the Election Commission. While the amount may appear substantial, it is peanuts (0.000383%) compared to the overall budget of roughly Rs 1 trillion allocated for development projects by the then Pakistan Muslim League (N) government for 2017-2018.
Meaning that in absolute terms, her share of tax hardly puts a dent on Pakistan’s development.
Thus, the rational strategy for the well-to-do like her could be to avoid taxes as they may not perceive their due share of tax as a significant contribution towards the exchequer.
What can Pakistani leadership do about it?
Collective action problems are difficult to resolve. Experts pose several solutions.
One is to limit the size of groups. Small groups are more homogenous (culturally for instance) and that increases the likelihood of cooperation.
Members of smaller groups are also likely to perceive the effect of their contribution and are therefore more willing to participate. Think about pitching in to fix your neighbourhood trash problem compared to that of your city.
In Pakistan’s’ case this is essentially a call for greater provincial autonomy. A formula more successfully implemented in India.
Another solution is to introduce a cost of group membership that individuals must pay if they are to benefit from the common goods.
This can be as ‘simple’ as introducing water pricing. Or more elaborate carrot and stick tactics that incentivise tax payers and punish non-payers. A proposal much written about in the media.
To be sure, collective action problems are difficult to quantify. They are based on assumptions that people everywhere act rationally in pursuit of their individual interests.
So, the more one observes society through this perspective, the more likely it is to debate possible solutions to them.
In other words, leaders must first think of citizens as rational individuals capable of independent decision making.
This may seem unfamiliar as many of us are used to a steady diet of derogatory stereotypes about each other’s identity – caste, sect, religion, nationality, etc. And, perhaps even physical and mental abilities.
So, we must observe closely.
Emotional appeals by Prime Minister Imran Khan might persuade some to file their returns. However, aware of rampant corruption and the failure of such drives in the past to bring meaningful change in the broken tax system incentivises many rational Pakistanis to not comply. Good intentions alone are not enough.
Online trolls who challenge the patriotism of Pakistani expats may appear to be speaking from genuine emotion. But their contempt for any criticism of state policies can also belie a calculation that such criticism poses a challenge to the status quo. With limited choice to find opportunities overseas, trolls in Pakistan may not have the luxury yet to offend or destabilise the status quo.
In the introduction my intention was not to compare the quality of the English and colloquial press. It was to emphasise the need to trust people with the truth however unsettling that may be.
Truth and reason go hand in hand.
The ultimate prize of speaking the truth, i.e. treating the population as rational and capable is a society that has learned to function independently, in practice.
A society on board with the policies of its leaders.
Convinced – not coerced or duped – that it is in their interest to do so.