A JOURNEY TO GILGIT BALTISTAN

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EU releases world tax havens blacklist

BRUSSELS: The European Union (EU) published its first list of international tax havens on Wednesday as part of a crackdown on multinational companies trying to avoid paying tax in the 28-nation bloc.
The list of 30 territories includes Hong Kong and Brunei in Asia, Monaco, Andorra and Guernsey in Europe and a series of Caribbean havens including the Cayman Islands and British Virgin Islands.
The European Commission proposals also include reforms to end sweetheart tax deals following a series of investigations into arrangements between EU countries and firms including Amazon, Apple and Starbucks.
“We are today publishing the top 30 non-cooperative jurisdictions consisting of those countries or territories that feature on at least 10 member states’ blacklists,” EU Economic Affairs Commissioner Pierre Moscovici told a news conference.
The former French finance minister said the publication of the blacklist was a “decisive step” that would “push non-cooperative non-EU jurisdictions to be more cooperative and adopt international standards.”
The full list is: Andorra, Liechtenstein, Guernsey, Monaco, Mauritius, Liberia, Seychelles, Brunei, Hong Kong, Maldives, Cook Islands, Nauru, Niue, Marshall Islands, Vanuatu, Anguilla, Antigua and Barbuda, Bahamas, Barbados, Belize, Bermuda, British Virgin Islands, Cayman Islands, Grenada, Montserrat, Panama, St Vincent and the Grenadines, St Kitts and Nevis, Turks and Caicos, US Virgin Islands.
But critics say the publication of the list risks being seen as an attempt to distract from the EU’s need to tackle its own issues with tax avoidance.
Wednesday’s tax proposals are a response to the so-called “LuxLeaks “scandal that exposed deals with the tiny EU state of Luxembourg that saved some of the world’s largest companies, including Apple, IKEA and Pepsi, billions of dollars in taxes.
The dealings in Luxembourg have been particularly embarrassing for Jean-Claude Juncker, now the head of the European Commission, who was the small duchy’s premier when the deals were made.
The EU is also looking to build on existing probes into the tax dealings of Apple in Ireland, Starbucks in the Netherlands and Amazon and Fiat in the Luxembourg.
“Corporate taxation in the EU needs radical reform,” Moscovici said as he unveiled the plan.
“Member States need to pull together and everyone must pay their fair share.”
Published in Dawn, June 18th, 2015

Farm & the budget by Ali Tahir

AGRICULTURE contributes almost a fifth to our national income annually but its growth has been moribund for years. Last year’s uptick reported in the recent Economic Survey needs to be seen in this perspective. It is not a pointer towards sustained growth but a one-off bounty delivered by nature, which has been somewhat shrivelled by the crash of commodity prices. Otherwise, the growth number would have been significant and probably, highlighted as an indicator of a reviving rural economy by the government.
For the next year, the budget projects growth in the agriculture sector at 3.9pc. This number is a key input to realise the GDP growth target of 5.5pc set for the economy. Given the sector’s dismal track record, a concerted effort at all levels to enhance farm productivity will be required to reach the target. In this scheme, the government has a pivotal role as its sector interventions, unveiled in the budget, set the tone for driving other stakeholders including farmers and agribusinesses to perform.
In the recent budget, three key new incentives have been announced for the agriculture sector. The first and second pertain to income tax holidays for businesses investing in the establishment of cold chains for storage and distribution of perishable farm products, warehousing of agriculture produce and production facilities for halal meat. The third relates to reduction of taxes on local and imported farm machinery and post-harvest equipment for handling and processing vegetables, fruit and fodder. The thrust is towards farm mechanisation and curtailment of post-harvest losses which, for some perishable fruits, can exceed 20pc of total production.
The question is whether these interventions are going to revive the farm sector and help the economy achieve its agriculture growth targets set for the next year.
The first two initiatives have no direct bearing on productivity enhancement of the farmlands which is critical for sustainable growth. They will still contribute towards increasing the farm incomes by limiting post-harvest losses and benefit the economy by incentivising the corporate sector.

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Will the new incentives revive agriculture?

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The third initiative has a direct impact on the rural economy but is likely to benefit large farmers more than small farmers owning less than 12 acres of land. Such farmers constitute more than 80pc of the country’s farming households and cultivate almost 48pc of the arable land. But they don’t have surplus resources to invest in farm machinery and rely on borrowed or hired machines to till their subsistence holdings.
In terms of an equitable treatment, the budgetary package offers little relief to the small farmers and also overlooks the necessity of their contribution in meeting the sector’s growth target. If their lands don’t deliver more produce, the target can never be achieved by the rest of the farmlands.
The policy focus on farm mechanisation is also less meaningful than other possible options, particularly reduction in input costs of seed, fertiliser and pesticide as a means to spur agriculture growth. Such interventions would have been quick in generating results, starting from the crop sown after the budget’s approval. They could have been targeted at small farmers to address productivity and equity issues and funded jointly with the provinces to curtail resource load on the federal exchequer. They would, however, have entailed cash allocations/outflows, adding to concerns, shared by the government and the IMF, about overshooting the fiscal deficit target. They, therefore, did not figure on the priority list of the budget makers despite their utmost political and economic significance.
Another reason for not prioritising expenditure on agriculture is rooted in devolution of this subject to the provinces. This has fragmented policy formulation and responsibility in a sector where integration is a necessity for optimal planning based on comparative advantage of different ecological zones, national food security concerns and cross-border input and commodity movements and transactions.
In some ways, the setting of a national target for agriculture growth after devolution, without ensuring agreement amongst the federating units on sector priorities and corresponding resource allocation in their budgets, is a paper endeavour.
The upshot is that the budgetary measures are unlikely to increase agriculture growth to the required levels. For this, other stakeholders must shoulder a greater burden.
In a resource-constrained situation, the government can ensure productivity gains and growth through regulatory interventions. It should begin by protecting farmers’ investments in agriculture inputs which have a direct impact on productivity levels. A campaign to check the sale of spurious seeds, fertilisers and pesticides, and enforcement of international standards for quality manufacturing of farm inputs will help improve farm yields. Otherwise, the economic pundits will have to hope for another plentiful year in which the domestic prices also escalate to hit the ambitious growth target.
The writer, a civil servant, has worked in the agriculture sector.
Published in Dawn, June 18th, 2015

Surviving Pakistan's slums: The extraordinary story of Mohammad Sabir

Amna Khawar

Every morning at sunrise, five-year-old Muhammad Sabir stepped out of his house, sagging a garbage bag to his shoulders, filling it with aluminum, plastic, paper scraps or anything he could find to sell. Salvaging trash to survive, he picked up snippets of newspapers and tried to read them.

“My family thought I had gone crazy,” he laughs.
Sabir comes from a family of nomads living in a slum on the outskirts of Lahore, Pakistan’s second largest city.
Until this point, Sabir had never attended school. Squatting in flimsy tents with no electricity, running water or toilets, they were routinely harassed by the local development authorities and forced to relocate because of illegal encroachment.
In Pakistan, the housing shortfall is estimated at 9 million units, according to a report published by the State Bank of Pakistan. Those unable to afford housing are driven to settle in undesired areas such as near open sewage channels or along the hazardous banks of River Ravi which floods every year.
“It is a national crisis,” says Dr Murtaza Haider, an associate professor at Canada’s Ryerson University whose research interests include urban development in South Asia.
“The state helps the empowered classes by giving them land for free or at nominal prices and withholding the land from the very poor."
Estimates regarding the number of slum dwellers in Pakistan vary between 23 to 32 million people. The majority are street hawkers and day labourers that earn very little and are not able to afford medical care or school fees.

Sabir poses with a group of boys from his neighbourhood.

A challenging fate

Sabir was expected to work and contribute to the family income instead of going to school, much like the rest of the children in his community.
He, however, had a burning desire to learn how to read but his family had severe doubts. Sabir was the eldest of nine siblings and his parents needed the income.
His mother was a cleaning lady and his father drove a donkey cart. But despite working long hours, they were barely able to get by and make ends meet.
Sabir’s extreme poverty was not his only challenge in life – it was also his caste. His ancestors belonged to the Hindu scheduled caste and converted to Islam at the time of partition.

Sabir is pictured in Lahore

“My community is like the untouchables,” Sabir explains. They are outcasts and heavily discriminated against: persecuted by the authorities and denied jobs.
Many of them do not have national identity cards which practically makes them a voiceless group resigned to their fate of working undesirable and hazardous jobs to survive.
By all accounts, Muhammad Sabir has not won the birth lottery. “Childhood for me was not comfortable,” Sabir laments.
Promising his parents that his education wouldn’t interfere with his job, the young boy enrolled in a local government school.
Sabir would wake up early and set out to collect garbage, come back home, grab his school bag and dash to school. After classes he would continue working, either selling cold water bottles to thirsty families or hard-boiled eggs as snacks at local teashops.
He would not get back home until late at night and then the homework would start; studying in candlelight since there was no electricity in their tent.
He says that in school, his teachers treated him differently because of his caste and classmates taunted him over dirty clothes not wanting to sit near him.
“I think I was not smelling very good at the time,” Sabir jokingly recalls. But the prejudice made him even more determined to prove himself.

An insatiable bookworm

For Sabir, it was books and the ability to read that opened up a whole new world and provided a source of empowerment.
In fifth grade, he started learning English and felt that people would treat him differently because he could speak the language.
“Just imagine a child like a blank piece of paper and then suddenly he can draw some meaning out of it,” Sabir says.
“My early encounter with reading really shaped my imagination and had a very strong impact on me.”
He was an insatiable bookworm, with his reading list ranging from Russian literature to Virginia Woolf to Karl Marx, easily putting some of our average reading lists to shame.
But it was Charles Dickens’ Great Expectations that profoundly influenced him to view society from a different angle. The timeless story of a boy who overcomes his social class through hard work and determination, Sabir realised that his circumstances did not need to define the rest of his life.

An activist is born

Sabir completed his schooling from City District Government Boys High School, Township Lahore and finally graduated from Pakistan’s Chartered Institute of Management Accountants and taught tuitions on the side to earn money.
Since 2007, he has also been working to address two critical issues in the slums: sanitation and education.

Sabir is pictured receiving an award in Lahore by the US Council.

He established an organisation called ‘Slumabad’, and is building mobile toilets for the community and enrolling children in schools.
Sanitation and hygiene are major challenges in Pakistan with over 90 million people without access to proper sanitation facilities – that is nearly half the country’s population.
In the slums, there are no toilets and dwellers urinate near their tents.
Women in particular suffer as they must wait the whole day for nightfall’s cover to relieve themselves. Water sources get contaminated, resulting in diarrhoea, cholera and other preventable diseases.
By constructing mobile toilets, Sabir hopes to not only address the issue of sanitation but also turn human waste into fertiliser or biogas to generate energy.

Coming to America

In recognition of his social work, Sabir was selected as a 2012 fellow for the Emerging Leaders of Pakistan (ELP) programme run by the Atlantic Council, a development program empowering future Pakistani leaders. For his training, Sabir traveled to the US for the very first time.
“It was a defining moment in my life,” Sabir remembers. “I was thinking to myself that: Oh wow! I have made something of myself.”
However, he did not immediately share the exciting news with his parents because he was scared he would not get an American visa. He had no passport or travel history. Money was still tight and he had to raise funds for the visa fee.
“I couldn't share with my friends and my family that I had been selected,” says Sabir. “I was hiding it from them and was very unsure.”
Eventually the visa arrived.

Sabir pictured in New York.

To prepare for his trip, Sabir viewed videos about US history on PBS (which he absolutely loves), watched Hollywood movies, including Gangs of New York (he’s a big movie buff), and read voraciously, including the US Constitution (which he believes is the second best constitution after France).
In the US, Sabir met with policymakers, civil society leaders and entrepreneurs to exchange ideas and learn best practices that can be applied in a Pakistani context.

Sabir is pictured with a group of people from his fellowship programme in New York.

“From the get go, Sabir struck me as a person who is driven, has a strong desire to learn, wants to make the most of the opportunities he gets and change his family's future,” Huma Haque, associate director of the Atlantic Council’s South Asia Center that manages the ELP fellows programme tells Dawn.com.
So what’s next for this social reformer?
Sabir is continuing his work in the slums through ‘Slumabad’.
He has also been selected for several additional fellowships, including the Acumen Fund as a 2015 Pakistan Fellow, recently in February.
The yearlong program will provide training to scale up his organisation. While Sabir blazes his trail forward, his journey to this point is remarkable.
For Pakistan’s slum children, the 28-year-old's story is a beacon of hope about overcoming one’s circumstances through hard work, determination, and dreaming big.

Source: DAWN