Media Office Hizb ut-Tahrir Pakistan

Open Letter to Finance Minister Ishaq Dar

بسم الله الرحمن الرحيم

Open Letter to Pakistan’s Finance Minister, Mr. Ishaq Dar

Peace be upon those who tread the path of guidance,

We address you regarding your commitment to the colonialist economic policies, as manifested in your budget speech of 12 June 2013. By doing so, Mr. Ishaq Dar, you have condemned Pakistan’s people to further economic misery and hardship. Your budget speech did not depart by one word from the damaging colonialist policies that were agreed with the International Monetary Fund (IMF) in the April 17-22 visit to the United States, by a six-member Pakistani delegation, including the secretaries for finance and economic affairs, the State Bank of Pakistan (SBP) Governor, as well as the additional secretary for external finance and chairman of the Federal Board of Revenue. It is these policies that dry up the economy and deny the people of the wealth of the country. Then each government throws up its hands and says that there is no money to spend upon looking after the affairs of the people. Just as the Kayani-Zardari government said before yours and the Musharraf-Aziz government said before that and just as your government is saying now!

Thus, Pakistan’s Budget 2013-14 was made in line with the wishes of the colonialists, with democracy as a rubber stamp in order to claim that the budget is in line with the wishes of the people, even though colonialism is against their interests and their deen! These destructive policies are elaborated in the IMF Country Report 12/35 of February 2012 and also the Letter of Intent to the IMF of 17 December 2010, which is a letter of commitment from both the State Bank and the Finance Ministry, to ensure implementation. And the pillars of the colonialist policies that are undermining the economy of Pakistan are three: privatization of Pakistan’s electricity that cripples it, huge taxation that strangles economic activity and weakening of Pakistan’s currency that causes inflation.

Firstly, privatization of Pakistan’s electricity to make it prone to shortages and causes hugely expensive electricity, under the banner of “financial viability of the electricity sector” and “reducing the government’s foot-print.” Privatization raises electricity prices so that the private owners can profit in their business. So, whilst private owners amass huge wealth by owning electricity resources, the rest of society is stricken by increasingly un-affordable energy prices. In addition, regarding the electricity shortages, the government itself fell into debt to these private interests to the order of billions of Rupees. So, to maintain profits in the face of the government withholding payments, the private interests were compelled to reduce production. This “circular debt crisis” is the reason that only 10,000 MW or less electricity is being produced. This is even though the total installed capacity is 19,855 MW, dropping to 15,150MW at times of low river flow, against a peak demand that varies between 11,500 MW in the cooler months up to 17,500 MW, during the peak of the hot summer. All this is the result of making electricity a business and not a right for the people. And this privatization of the electricity sector will continue under Kayani-Sharif regime, just as it did under previous governments.

Privatization of electricity contradicts our Deen, Mr. Dar. Islam ensures the distribution of wealth and one of its mechanisms is the public ownership of electricity resources as well as coal, oil and gas. These resources are neither owned by the state nor individuals. Instead, the state administers such resources to ensure that its benefit is used for all the citizens. RasulAllah ﷺ said,

الْمُسْلِمُونَ شُرَكَاءُ فِي ثَلَاثٍ الْمَاءِ وَالْكَلَإِ وَالنَّارِ

“The Muslims are partners in three things, waters, feeding pastures and fire” (Ahmad)

The Khilafah will abolish taxes upon power and fuel which have further greatly inflated their prices far beyond the cost of extraction, refinery and distribution. Any profit from sales to non-hostile non-Muslim states will be put to use for taking care of the public's needs as it is the public’s property. Thus Islam’s treatment of public property will be a means of great comfort for the Muslims.

Secondly, the strangling of Pakistan’s economy through huge taxation, crippling industry and agriculture, made with the claim to “strengthen public finances” and under the banner of “reformed General Sales Tax.” Taxation is constantly being increased as a proportion of the total revenue. In 2011-12, the government extracted Rs. 730,000 million in income taxes alone, which is more than the entire revenue collected in 2002-3.This has meant that the labour force, blue and white collar workers are facing ever greater hardships, with increased taxation eating away at their wages. Moreover, in the 2012-13 budgets, the government is now chasing a target of a staggering Rs. 914,000 million. Consider also sales tax that has swollen from 9% to 43% of the state’s major taxes. It is this sales tax that has made buying food, inputs for agriculture and industry unbearable for people, choking their ability to contribute to the economy and secure basic needs. In 2011-12, the government extracted Rs. 852,030 million in general sales taxes and in the 2012-13 budget, the target is Rs. 1,076,500 million. And your budget speech, Mr. Dar, confirms there is more trouble ahead.

This strangling by taxation contradicts our deen, Mr. Dar. Islam does not rely on taxation on income and consumption as virtually the sole means to generate revenue. Its revenue generation is based on accrued wealth beyond the basic needs or upon actual production. Even when the Khilafah does tax, it is with stringent conditions that are based upon accumulated wealth, so it does not penalize poor and under-privileged who are unable to secure their basic needs. And this is asides from the huge revenue that the state will generate from state owned and publicly owned enterprises such as energy resources, machinery and infrastructure manufacture, for example through sales to non-Muslim non-hostile states. Industry and agriculture will thrive in the Khilafah. They will not be strangled by taxes for all manner of crucial inputs, from energy and fertilizer to heavy machinery and engines. Instead, the state will generate revenue from profits of the trade and accrued trading merchandise or the land production. This allows the agriculture and industry to focus on production without fetters, whilst circulation is ensured through their giving of revenues from their profits or accrued wealth. Moreover the abundant revenues stipulated by Shariah prevent the need for the interest based colonialist loans, which has meant that Pakistan remains in huge debt because of the interest, despite having paid back the principal on the loans many times over.

Thirdly, the weakening of Pakistan’s currency leading to the huge rise in prices, made with the claim to “safeguard the stability of the finance sector.” Last year’s budget speech, remarked how the Rupee has fallen in value from sixty Rupees to the dollar to eighty, but now at the time of your speech nearly one hundred Rupees are required to buy a single dollar! The cause is the colonialist policy of heavy borrowing from the central bank, which is called “monetizing” the deficit. Because this method always leads to the growth of monetary base and of money supply and ultimately inflation, it is often referred to as just “printing money.”

Not only is this weakening of the currency the cause of damaging inflation, it contradicts our deen, Mr Dar. Islam has mandated that the currency of the state is backed by precious metal wealth, ending the root cause of inflation, by building the currency on a powerful foundation. RasulAllah ﷺ commanded the Muslims to mint Gold Dinars, weighing 4.25g, and Silver Dirhams, weighing 2.975g, as the currency of the state. This is why the Khilafah enjoyed stable prices for over a thousand years. Return to the gold and silver standard for Muslims is eminently practical. The lands of the Muslims in which the Khilafah state is likely to arise contains a lot of gold and silver resources, such as the Sandaik and Reko Diq fields in Pakistan.

By committing to these three key colonialist policies in your budget speech, you have expressed publically to implement other than Islam, by implementing the oppressive system of capitalism in the country. You did so even though you are a member of a party that considers itself as a league for Muslims and claims its roots to the time when Muslims of this region made huge sacrifice to escape from colonialism, to secure a state in the name of Islam. Did you imagine our forefathers sacrificed only to have that state be exploited and laid destitute by the colonialists, through their tools the International Monetary Fund (IMF) and the World Bank? Thus, by you doing what you have done, you will share in the blame of the heads of the regime, Prime Minister, Nawaz Sharif and General Kayani, when they are brought before the Khilafah’s judiciary for trial. And above all of this you will share in the sin of your chiefs, though on the day of judgement you will wish you had not done so. Woe to you, Mr. Ishaq Dar, you have sold yourself in this life and the Aakhira and it is a poor trade!  Allah سبحانه وتعالى said,

وَقَالُوا رَبَّنَا إِنَّا أَطَعْنَا سَادَتَنَا وَكُبَرَاءَنَا فَأَضَلُّونَا السَّبِيلَ

“And they will say: Our Lord! Verily we obeyed our chiefs and our great ones, and they misled us from the (Right) Way” [Surah Al-Ahzab 33:67].

And He said سبحانه وتعالى,

وَإِذْ يَتَحَاجُّونَ فِي النَّارِ فَيَقُولُ الضُّعَفَاءُ لِلَّذِينَ اسْتَكْبَرُوا إِنَّا كُنَّا لَكُمْ تَبَعًا فَهَلْ أَنْتُمْ مُغْنُونَ عَنَّا نَصِيبًا مِنَ النَّارِ* قَالَ الَّذِينَ اسْتَكْبَرُوا إِنَّا كُلٌّ فِيهَا إِنَّ اللَّهَ قَدْ حَكَمَ بَيْنَ الْعِبَادِ

“And, when they will dispute in the Fire, the weak will say to those who were arrogant: "Verily, we followed you, can you then take from us some portion of the Fire'') 48. Those who were arrogant will say: "We are all (together) in this (Fire)! Verily, Allah has judged between (His) servants!'' [Surah al-Ghaafir 40:47-48]

Hizb ut-Tahrir                                                             3 Shaban 1434 AH

Wilayah Pakistan                                                         12 June 2013 CE