Does the state have any moral legitimacy to collect taxes of any kind from the populace, when other non-state actors have already illegally taken monies from the citizens?
A few days ago DG Rangers created quite a stir in political circles. He said that more than Rs230 billion is being collected illegally in Karachi every year.
Without providing details, the DG claimed that these sums take the shape of alms collected coercively, illegal water distribution, coercive collection of sacrificial animal hides, land grabbing, illegal marriage halls, weekly or monthly extortion monies, unlawful car parking businesses and what not.
Since the DG did not provide any proof, the political parties had a field day, casting the said report as ambiguous and baseless. Well, we have got news for you: these kind of illicit activities don’t exactly come with their full financial records, accounting disclosures, and audit reports.
While there may be some crude evidence in the form of registers available in the headquarters or living quarters of whosoever these hooligans are (we see no evil, we hear no evil), there won’t be any readily available data or documents with info-graphics to give evidence to the reign of chits and slips terrorising Karachi.
So how did DG Rangers arrive at that number? This column doesn’t claim expertise in such affairs but anecdotal evidence from Karachis parrot market offers some clue. Though, we should quickly add that these are anecdotal or street reports, which may well, be rumours, and for which we have no documentary evidence to support.
Karachi’s parrot market operates every weekend (i.e. four times a month) near Liaquatabad. Its an informal market with no government regulation or taxes whatsoever, where some of the valuable parrots and other precious birds are traded at Rs100,000 and more.
Vox populi reports suggest that the organisers of that parrot market charge different rates and fees for different purposes. For example, there are fees for parking; and fees for entering the market as a seller, where different rates are charged depending on the quality and quantity of birds; and so forth.
We don’t know the full amount collected by the organisers under whose protection this parrot market is held. But rumour has it that the local police station gets Rs500,000 every weekend as a token of appreciation for not meddling in the market.
Assuming that the organisers pay a fifth of their total collection to the police station, the estimated total collection for each weekend comes out to be Rs2.5 million.
Multiply that by four and you have Rs10 million being collected as unofficial, illegal transaction costs charged by the organisers, whosoever they are.
Now assuming that these transaction costs are 10 percent of each transaction, the total market value or the size of each weekend parrot market comes out to be Rs250 million or Rs1 billion per month (four weekends per month). Note that the size would double if you assume that these transaction costs are roughly 5 percent of each transaction.
These numbers look small in isolation, but they are a big number for a parrot market that operates only four times a month. Consider also that this is just an example of one small market in one small area of Karachi; expand your imagination across the length and breadth of the city with many similar examples in different geographical pockets and types of business and the Rs230 billion a year starts looking like peanuts.
While we let that sink in for a while, lets take a few steps back to Islamic history. Imam Ahmad ibn Hanbal – one of the leading scholars of his time – was once asked that if violent groups had overcome certain section of the population and forcefully collected from them the alms tax on their wealth, would that discharge their duty to the pay the alms tax to the state. And Imam Hanbal said that the companion of the Prophet had discharged the duty in such cases, and so would he.
The intention to bring this tradition to the discourse isn’t to issue any religious directive on the subject, but just to highlight an important moral dilemma for the state in the context of state-society relationship. Does the state have any moral legitimacy to collect taxes of any kind from the populace, when other non-state actors have already illegally taken monies from the citizens?
Source: Business Recorder