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December 6, 2017

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Corruption root cause of low tax-to-GDP ratio

LAHORE: Corruption is all-pervading in Pakistan due to political, social, and legal weaknesses, and has resulted in low tax to GDP ratio, misuse of 20 to 30 percent of development expenditure amounting to Rs300-400 billion/year, and losses worth Rs600 billion in the state owned enterprises.
Eliminating corruption in Pakistan is an uphill task because corrupt practices are a normal in our system. No one is censured by the society for living beyond his/her known means of income. As the civil society is almost non-existent in Pakistan corruption is no more a stigma. The social status and respect in the society is directly related to wealth, irrespective of the manner in which this wealth is accumulated. There are known tools that largely curb malpractices but this can be done through strong institutions that we lack. Only strong institutions could take across the board action and enforce laws without exception.
Civil society around the world comprises of middle class that are not very rich but live a decent life. They are lawyers, accountants, doctors, engineers, corporate executives.
They wield immense influence in the society. In Pakistan people belonging to these professions are not active socially or not well organised. Civil society is still in formative stage to play a decisive role in eradicating corruption. On the political side, the causes of ever increasing corruption include weak political will, immature political culture, immoral electoral processes, immature political leadership and crisis of leadership.
During election, anyone can see that the candidates spend more than the limit set by the election commission. Neither the regulatory institution nor the public at large takes notice of this illegal overspending.
Public servants site lower remunerations to government employees as a cause of petty corruption. This is a weak argument to justify extortion which is a crime. Every anti-corruption expert advises the government to withdraw

discretionary powers of the bureaucracy that is a major cause of corruption. Non-adherence to rules and regulation not only weaken the writ of the government but also promote malpractices. Moreover, lack of accountability, particularly the absence of internal accountability in most of the public sector institutions has provided the bureaucrats an enabling environment for corruption. Office of the Auditor General of Pakistan lacks capacity to audit all government expenditure and restricts itself to 5-10 percent audit of institutions where the risks of malpractice in its opinion are higher. Public institutions should be strengthened through strict internal accountability instead of depending on external audit where the auditing capacity is limited. A proper check and balance mechanism is the most effective deterrent to transgression of public servants. Inefficient judicial system also forces the people to get the things done through speed money. Over-regulation is a major cause of corruption in the public sector. Rules should be simple and clear to discourage corrupt practices.
Poverty, under development, widening gap between rich and poor is the direct result of corrupt practices prevalent in our society. Good governance and transparency are the main requisite for sustained and equitable economic growth. It should be a matter of grave concern for our legislature and the government that Pakistan is always placed among few of the most corrupt countries in the world by almost all creditable global institutions.

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