By Huzaima Bukhari & Dr Ikramul Haq
The Supreme Court on April 17, 2013 suspended the March 14, 2013 notification issued by Interior Ministry granting former interior minister Rehman Malik and his predecessors lifetime perks and privileges.
Hearing the suo moto notice case regarding the unlimited perks and privileges granted to two former PMs, all former interior ministers, Sindh CM and other senior officials by the outgoing government, the five-judge bench headed by the Chief Justice sought a response from relevant authorities in this regard.
Pakistan is ruled and controlled by predatory elites in whose hands power and wealth are concentrated.
The ruling elites – comprising indomitable military-civil-judicial complex, unscrupulous politicians, mighty religious party leaders, absentee land owners, media tycoons and greedy traders – are engaged in loot and plunder, rent-seeking and snatching of public property.
Their lust for more and more control is giving rise to perpetual confrontations risking the very survival of the State.
These elites suffer from many maladies such as self-righteousness, self-praise, phobias of all kinds, especially losing of power and money, and despair arising out of affluence. These classes are captives of their own self-interests and victims of perpetual self-aggrandisement.
The two examples of worst rapacious activities of predatory elites are discussed below:
Grabbing of state lands
The high-ranking military-civil officials, judges, holders of public office, politicians, members of influential pressure groups do not pay a single penny as tax on plots they receive free of charge or at confessional rates though section 13(11) and 39(1)(j) of the Income Tax Ordinance 2001 so requires. Section 13(11) of the Income Tax Ordinance, 2001 applies in the case of employees (military or civil) says:
“Where, in a tax year, property is transferred or services are provided by an employer to an employee, the amount chargeable to tax to the employee under the head “Salary” for that year shall include the fair market value of the property or services determined at the time the property is transferred or the services are provided, as reduced by any payment made by the employee for the property or services”.
Section 39(1)(j) of the Income Tax Ordinance, 2001 is attracted in the case of persons other than State employees, it declares the following as income chargeable to tax:
“The fair market value of any benefit, whether convertible to money or not, received in connection with the provision, use or exploitation of property”.
Section 14(b) of the Income Tax Ordinance, 2001 defines “services” to include the provision of any facility” and the concept of “fair market” is defined in section 68 as under:
“68. Fair market value.- (1) For the purposes of this Ordinance, the fair market value of any property or rent, asset, service, benefit or perquisite at a particular time shall be the price which the property or rent, asset, service, benefit or perquisite would ordinarily fetch on sale or supply in the open market at that time.
(2) The fair market value of any property or rent, asset, service, benefit or perquisite shall be determined without regard to any restriction on transfer or to the fact that it is not otherwise convertible to cash.
(3) Where the price referred to in sub-section (1) is not ordinarily ascertainable, such price may be determined by the Commissioner”.
On April 13, 2013, the Chief Justice took notice of press clippings containing the details that just one day before the end of the current National Assembly’s term, PM Raja Pervez Ashraf issued an order for an “unprecedented security protocol” for himself and former Prime Minister Yousuf Raza Gilani – see details at http://www.supremecourt.gov.pk/web/page.asp?id=1426.
It is indeed a welcome move, but one hopes the issue of non-payment of tax by the allottees of state lands at throwaway prices and other benefits will also be taken up by the apex court. In the last days of the government, the following obnoxious steps were taken:
1. Just hours before the constitutional tenure of Parliament, the Interior Ministry issued a notification on 14.3.2013 declaring unlimited perks and privileges for Rehman Malik, Federal Interior Minister and his predecessors.
2. According to the note of the Registrar of Supreme Court put up to the CJP, “the benefits/privileges bestowed would be a huge burden on the public exchequer. The security protocol would further deplete the strength of security agencies, who otherwise do not have adequate force to maintain peace/security and protect the rights/freedoms of citizens including the right to life, security, liberty and property, etc. The measures seem to be violative of Articles 4, 9, 24 and 25 of the Constitution”.
3. The Sindh Assembly on 14.3.2013, the last day of its tenure, passed two private bills moved by Pakistan People’s Party legislators Ghulam Mujadid Isran and Dr Sikander Mandhro respectively to grant lifetime monetary and other benefits to the outgoing Chief Minister, the Speaker and the Deputy Speaker.
The CJP on the basis of news reports presented to him by the Registrar passed the following order:
“I have carefully perused contents of press clippings dated 16.03.2013 published in “daily Dawn”, according to which a day before dissolution of Assembly, incumbent Prime Minister Raja Pervez Ashraf issued an order of following unprecedented security/protocol for himself and former PM:
(i) A contingent of 450 police personnel would be taken from Islamabad Police, out of them 150 would be deployed for Raja Pervez Ashraf. Same number of personnel would be deployed for Syed Yousuf Raza Gilani (former PM).
(ii) Special protocol/security of special squad of 15 Rangers and 15 Frontier Constabulary force would be provided to five former PMs during their intercity movement. Their names have been mentioned to be as Raja Pervez Ashraf, Syed Yousuf Raza Gilani, Chaudhry Shujaat Hussain and Zafarullah Khan Jamali. A batch of five DSPs of Islamabad Territory, led by Dr Sultan Azam Taimoori, DIG was called at PM House on 15.03.2013 evening for selection of a DSP to head the force. A contingent of 450 police personnel consisting of ex-army jawans, inducted in the ICT police by the former government on a three years contract, will be spared for this purpose and the vacuum created by their departure will be filled after fresh recruitment. Similarly, Interior Ministry issued a notification on 14.03.2013, reference of which finds mentioned in the “Express Tribune” dated 15.03.2013, according to which former Federal Interior Ministers and the Federal Ministers excluding the caretaker Federal Ministers, who had held the office when the Constitution stood suspended, can benefit from the following facilities:- a. Protocol coverage be provided by FIA to the Ministers, their spouses and children at all airports of the country; and b. Service of a Personal Staff Officer/Assistant Private Secretary/Personal Assistant, a driver, and an orderly, all to be appointed by the National Data Base Regulatory Authority.
On March 16, 2013 that the Sindh Assembly had passed a law, wherein lifetime monitory and other benefits to the outgoing CMs, Speakers and Deputy Speakers have been provided, as follows:
“If a person who remained CM, Speaker or Deputy Speaker for not less than four years, on the expiry of his term, shall be entitled for seventy percent of salary and allowances per month, a Private Secretary of grad-17, an Assistant, a Driver, a Cook, a Gardener, a Sanitary Worker, lifetime police security and landline and mobile phone facilities with a credit of Rs 10,000/- per month.”
Sindh Assembly has also passed the Sindh Provincial Assembly (Members) Privileges (Amendment) Law, 2013, according to which the Provincial Law makers have been brought at par with the Senators and MNAs as far as the perks after their tenure are concerned, namely:
a. A MPA shall be entitled to have access to all government guest houses, rest houses and Sindh House Islamabad and Sindh House Gwadar at the rates applicable to the government officers on official tours;
b. Use of VIP Lounges at all airports;
c. Lifetime entry pass for the Assembly Secretariat, Assembly Library and Speaker Gallery to observe Assembly Sessions;
d. Official or Gratis passport for self and spouse for life;
e. Issuance and renewal of four weapons licences at fees applicable to government employees.
f. The spouse of deceased minister and a dependent child up to 18 years shall be entitled to enjoy these facilities.
Prima facie, it seems that at the cost of public exchequer and in violation of Articles 3, 9, 14 and 25 of the Constitution, the order issued by former Prime Minister, Raja Pervez Ashraf and notification dated 14.03.2013 issued by Interior Ministry are without any lawful authority. Likewise two amendments made by the Sindh Provincial Assembly extending privileges to the former CMs, Speakers, Deputy Speakers and the Ministers at the cost of public exchequer being unconstitutional are unwarranted as no law can be promulgated, which is not in consonance with the Constitution.
The citizens of Pakistan, who are suffering from different kinds of miseries, deprivation, lack of education, lack of health facilities, lack of drinking water and lack of normal facilities of life cannot share such financial burden of the former Prime Ministers, Interior Minister, Chief Ministers, Speakers, Deputy Speakers etc except if the law so permits or the concerned authorities decide to provide them protection against any threat to their lives in peculiar circumstances.
As far as law promulgated by the Sindh Assembly to extend the benefits to the Chief Ministers, Speakers, Deputy Speakers, Ministers or their families as well as the members etc is concerned, whether it is permissible at the touchstone of Article 8 read Article 9 of the Constitution of Islamic Republic of Pakistan.
The privileges, which have been extended to the above functionaries for the purpose of self serving, are required to be examined at the touchstone of Article 184(3) of the Constitution, therefore, instant note be registered accordingly as a Constitution Petition.
Notice be issued to:
(i) Interior Secretary and Secretary, Ministry of Law and Justice, Government of Pakistan specifying the competence under the Constitution and the law of the Prime Minister to extend life time benefits to himself as well as to the former and future Primer Ministers at the cost of public exchequer.
To explain as to whether the notification dated 14.03.2013 issued by the Interior Ministry extending security/protocol to the Interior Minister from the public exchequer is in accordance with the law and the Constitution.
Interior Secretary and Secretary Law are also directed to place on record copies of orders/notifications issued by the Prime Minister as well as the Interior Secretary, noted above.
(ii) Chief Secretary, Secretary Home as well as Secretary Law, government of Sindh.
(iii) Auditor General and Accountant General of Pakistan to calculate the approximate financial burden, which the nation has to bear if the privileges conferred by the incumbent Prime Minister upon himself and others as noted above are allowed to continue.
(iv) Raja Pervez Ashraf, former PM, Rehman Malik, former Interior Minister as well as Syed Qaim Ali Shah, former Chief Minister, Sindh to appear in person or through their counsel, if they desire to support or justify the actions of the PM and the legislation respectively in pursuance whereof prima facie the nation has been financially burdened as salaries etc of these persons shall be paid from the public exchequer.
(v) Learned Attorney General for Pakistan and Advocate General, IGP Sindh, to submit parawise comments and state as to whether at the cost of public exchequer the benefits extended to the former PM etc can be provided to them by sparing contingent of police as per their choice and desire.
(vi) Advocate General, Sindh may also place on record copy of Sindh Provincial Assembly (Members) Privileges (Amendment) Law, 2013.
It is a matter of record that funds of billions of rupees were released by the government within the last day after making sure the banks remained open to hand out the money to relevant parties – the federal government declared March 16 (Saturday) a working day so that it could get the bureaucracy to push through the last minute appointments, loans, promotions and transfers. The entire staff at National Bank of Pakistan and State Bank of Pakistan was on high alert throughout the day to accommodate the last whims and desires of the people who were about to abdicate power within a few hours. Even private banks were forced to remain open on Saturday ensuring all cheques of government got cleared on that day.
On the last day of the National Assembly (NA), Speaker approved 100% increase in benefits and allowances of all members of the NA. Millions of rupees worth of new cars were bought on her orders and approval of life time benefits and perks for Speaker of NA were obtained.
In a letter to Finance Minister, Abdul Hafeez Shaikh, an ex-Member of Board pointed out that collossal revenue loss occurred due to non-taxation of benefits given to public office holders, the high-ranking civil-military officials, politicians and their cronies as free or at a confessional rate as FBR did not invoke section 13(11) and 39(1)(j) of the Income Tax Ordinance, 2001. The finance minister and FBR ignored the letter as expected. FBR did not bother to recover tax from the beneficiaries. In Pakistan, privileged classes want to tax the weaker sections of society (exorbitant sales tax on many item consumed by the poor), but not ready to pay taxes on their incomes. Adding insult to injury, these predatory elites get unprecedented perquisites and benefits funded by taxpayers – what makes the situation more painful is the fact that even no tax is paid on these ignoring the explicit provisions of the Income Tax Ordinance, 2001 mentioned above.
Extraordinary perks and benefits
Pakistan is a tax haven for the rich and mighty. The poor are victims of fiscal highhandedness whereas the ashrafiya – military-civil bureaucracy, higher judiciary, landed aristocracy and its cronies, industrialist-turned politicians, religious and spiritual leaders (ulema and pirs), media tycoons and unscrupulous businessmen – is enjoying all kinds of privileges and perquisites without paying due taxes on these. The elites (ashrafiya) while thriving on taxpayers’ money, borrowed funds and foreign aids get extraordinary tax concessions – even where taxation is provided they do not discharge their liabilities and the bodies responsible for collecting taxes at federal and provincial levels instead of taking any punitive action, extend them legal cover through the infamous Statutory Regulatory Orders (SROs), tax amnesties and immunities for avoidance, or just remain silent and look the other way.
While the poor sections of society are paying exorbitant indirect taxes on commodities they consume and are being crushed under the skyrocketing inflation, ashrafiya is enjoying extraordinary tax benefits, for example:
1. The perquisite represented by the right of the President of Pakistan, the Provincial Governors and the Chiefs of Staff, Pakistan Armed Forces to occupy free of rent as a place of residence any premises provided by the Government.
2. The perquisite represented by free conveyance provided and the sumptuary (entertainment) allowance granted by Government to Provincial Governors, the Chiefs of Staff, Pakistan Armed Forces and the Corps Commanders.
3. The perquisites and allowances provided or granted by Government to the Ministers of the Federal Government.
4. The perquisites represented by the right of a judge of the Supreme Court of Pakistan or of a judge of High Court to occupy free of rent as a place of residence any premises provided by Federal or Provincial Government, as the case may be, or in case a judge chooses to reside in a house not provided by Government, so much of income which represents the sum paid to him as house rent allowance.
5. The following perquisites, benefits and allowances received by a Judge of Supreme Court of Pakistan and Judge of High Court, shall be exempt from tax:
a. Perquisites and benefits derived from use of official car maintained at Government expenses;
b. Superior judicial allowance payable to a Judge of Supreme Court of Pakistan and Judge of a High Court;
c. Transfer allowance payable to a Judge of High Court;
d. The services of a driver and an orderly;
e. 1000 (one thousand) free local telephone calls per month;
f. 1000 units of electricity as well as (25 hm3* of gas) per month and free supply of water; and
g. 200 litres of petrol per month.
[If during service, a judge dies, exemption from tax in respect of benefits and perquisites mentioned above provided to his widow shall also be exempt].
The above shows that the powerful in the Land of Pure live in palatial palaces at the expense of taxpayers’ money, while the poor are dying of hunger and vast majority lack even basic facilities like drinking water, what to talk of health and education. Tragically, these powerful elements do not pay taxes on perquisites and benefits enjoyed by them. Then within a group there is discrimination. The judicial allowance of the judges of the Supreme Court and High Courts is exempt from tax, whereas the same is taxable in the hands of the lower judiciary. Does this not attract suo motu action on the part of the apex court on the touchstone of Article 25 of the Constitution?