Afghan anti-poor policies

This video says about itself:

Poverty in Afghanistan is driving some families to take desperate measures.

They are sending boys as young as five across the border into Pakistan, to buy cheap flour, and smuggle it back home.

But the youngsters are risking injury, even death.

Al Jazeera’s Zeina Khodr reports.

George W. Bush‘s and now Barack Obama‘s occupied ‘new’ Afghanistan is the hungriest country in the world.

The United States and NATO-sponsored ‘democratic‘ (elected with a million and a half fake votes, the European Union says) regime in Kabul seems to think there is not yet enough starvation in Afghanistan.

By Khan Mohammad Daneshju in Kabul:

Afghan Taxes Squeezing Poorest

Import duties simply translate into punitive prices while local businesses get away with unpaid taxes, experts say

By Khan Mohammad Danishju

As the Afghan government prides itself on boosting budget revenues, it has been accused of using methods that hurt people on modest incomes while letting large businesses off some or all their taxes.

In an interview for IWPR, finance ministry spokesman Aziz Shams said domestic revenues reached 1.8 billion US dollars in the last fiscal year, which runs from March to March. That represents a 25 per cent increase on the previous year’s figure of 1.4 billion dollars, although it would be less with inflation taken into account.

Shams said around 50 per cent of government revenues came from customs duties and other import-related levies.

The Afghan government operates two fiscal accounts known as the operating and development budgets. While the latter is funded almost entirely by international donors, the operating budget – for wages and running costs – comes partly from domestic revenues. (See Afghan Government Has Cash, Won’t Spend for more on the development budget.)

Last year, domestic revenue was equivalent to 59 per cent of the operating budget, while this year it is forecast at a similar 62 per cent. The Afghan government is under pressure to increase this proportion so as to reduce its reliance on donor funding.

An IMF statement in February, noted that “tax collection has been growing at about 32 per cent per year, a commendable achievement for almost two years of impressive gains”, while noting that the government should be “pressing ahead with revenue reforms to ensure continued sizable increases in tax collection in coming years”.

The finance ministry’s draft budget statement for the current year said the planned revenue increase would come from macroeconomic policies designed to growth and thus the tax base, more efficient collection, rising customs receipts thanks to increased demand for imports, efforts to identify non-paying businesses, and in the long run, the development of mineral extracting industries. (See Oiling Wheels in Afghanistan on the latter.)

Critics of the system say more efficient but indiscriminate taxation of goods means the final price is passed onto consumers – very often the poorest sections of society in one of the world’s most impoverished nations.

“Prices at the market increase on a daily basis. When I ask the shopkeepers about it, they say it’s because taxes have gone up,” manual labourer Ezatullah said.

Ezatullah earns about eight US dollar weeks by hiring himself out as a day labourer on Kabul’s Hajji Yaqub Square. He manages to get work about three days in every seven.

“Why in God’s name are they trying to collect taxes out of our pockets?” Ezatullah asked. “It is shameful for the government to be announcing that its revenues have gone up.”

Public sector employee Gol Ahmad expressed cynicism about the tax system.

“The increase in revenues is indeed a matter of pride for government officials, because they collect them from the pockets of the poor and put them in their own pockets. Why shouldn’t they be happy?” he asked.

Ibrahim Zarif, a trader, confirmed that he and his colleagues passed on all costs including tax hikes to the customer.

“When we import something, we include all the costs such as transport, taxes, illegal extortion by the police and bribes into the prices, and then we add on our percentage profit,” he said. “It’s the public that has to pay for all our costs and profits.”

Khan Jan Alokozay, deputy chairman of Afghanistan’s Chamber of Commerce and Industry, blamed a policy of raising import taxes on everything from cars to essentials like blankets, rice, cooking oil and sugar.

“When taxes go up, traders have to increase retail prices. This is a problem which ordinary people are having to deal with at a time when many can’t afford the bare essentials because of unemployment and low incomes,” Alokozay said.

He cited an increase on the duty payable on flour last year – later lowered when it resulted in retail prices more than doubling – as an example of a misconceived attempt to boost local production.

“The government didn’t make accurate calculations on this. It thought it could increase the price of locally-produced wheat by increasing taxes on wheat flour imports, but it hadn’t reckoned with the fact that Afghanistan doesn’t produce enough wheat to be self-sufficient, so it has to import it from abroad.”

The opening up of the Afghan economy after the Taleban government was ousted in 2001 resulted in a flood of imports rather than the growth of local production. Businesses preferred the quick returns of trade over investment, and the government refrained from intervening in the belief that markets would regulate themselves. Afghanistan’s exports remain limited to a few items – handmade carpets, karakul lambskins and dried fruit and nuts.

The article forgets the most important item: hard drugs, traded by President Karzai’s brother and others.

Afghanistan to be handed over to gangsters. The Afghan economy now runs on opium sales and foreign aid: here.

Afghan child brides: here.

Mood in Northern Afghanistan Shifts against German Troops: here.

Hope in Afghanistan: An Interview With Malalai Joya: here.

David E. Sanger, Eric Schmitt and Thom Shanker, New York Times News Service: “President Obama’s national security team is contemplating troop reductions in Afghanistan that would be steeper than those discussed even a few weeks ago, with some officials arguing that such a change is justified by the rising cost of the war and the death of Osama bin Laden, which they called new ‘strategic considerations.’ These new considerations, along with a desire to find new ways to press the Afghan president, Hamid Karzai, to get more of his forces to take the lead, are combining to create a counterweight to an approach favored by the departing secretary of defense, Robert M. Gates, and top military commanders in the field”: here.

64% of Americans want to see troop levels in Afghanistan reduced: here.

USA: Delta charges U.S. troops returning from Afghanistan $2800 in baggage fees, soldiers capture it on video: here.

The Guardian has reported that Britain and the US are pressing for the lifting of UN sanctions against 18 former senior Taliban figures: here.

Karen J. Greenberg, TomDispatch: “In the seven weeks since the killing of Osama bin Laden, pundits and experts of many stripes have concluded that his death represents a marker of genuine significance in the story of America’s encounter with terrorism. Peter Bergen, a bin Laden expert, … wrote, ‘Killing bin Laden is the end of the war on terror.’… We can just sort of announce that right now.’ Yet you wouldn’t know it in Washington where, if anything, the Obama administration and Congress have interpreted the killing of al-Qaeda’s leader as a virtual license to double down on every ‘front’ in the war on terror”: here.