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Caught in the eye of a storm of civil disobedience, with folks hitting the streets and setting ablaze their sky-high utility bills, demanding the authorities crack down on the privileged few who luxuriate in unparalleled privileges and exceptions, Pakistan is teetering on the brink of chaos and pandemonium.

Food and energy costs shot through the roof due to the International Monetary Fund's (IMF) tough love approach of cutting subsidies, letting the market decide exchange rates, making the energy sector profitable by matching tariffs with costs and broadening the tax net.

In July, the IMF Executive Board gave the green light to a $3 billion stand-by arrangement (SBA) for Pakistan. This financial assistance aims to support the stabilization program because Islamabad was unable to fully implement the 39-month Extended Fund Facility (EFF) agreement that the IMF board approved back in 2019. Pakistan found itself in hot water with skyrocketing food prices, energy expenses, and exchange rates going through the roof, all thanks to the IMF imposing strict conditions on its SBA facility. This sparked a firestorm of protests and unrest across the nation.

In a show of defiance against the government's decision to force them to pay the indirect taxes, the protesters set their electrical bills on fire and, in some parts of the country, went full steam ahead into the offices of service providers to let off their frustrations.

At least five people in Punjab and Sindh committed suicide when they got their heavily taxed electricity bills for July. A majority of those who took their lives belonged to the lower middle socioeconomic category and lacked the financial means to afford the exorbitant power expenses. These electricity bills included a wide range of levies, tariffs, and taxes that power companies collected on behalf of the Federal Board of Revenue (FBR), the nation's tax collection agency.

What the masses say

Fuming with anger over the surging food prices and the exorbitant energy costs, the people found themselves between a rock and a hard place, struggling to make ends meet.

"The public is up in arms about the skyrocketing food prices and the exorbitant utility bills. This outcry has spread like wildfire, reaching various cities, and people from all walks of life, traders, political parties, and civil society have joined forces with the protestors, issuing rallying cries for mass protests to push for their demands," Momin Khan, a teacher in Khyber Pakhtunkhwa’s Swabi district, told the Al Mayadeen English website. 

He said that his overall take-home amounts to a measly Rs. 40000 (131 US dollars), which barely scratches the surface when it comes to footing the bill for chow, threads, crib, schooling, and healthcare. "Why on earth would I have enough dough to foot the bill for my electricity, which costs Rs. 15000 (49 US dollars), just for a couple of light bulbs and a fan?" he pondered.

Mudassar Ahmad, a retired government official in Peshawar, expressed his frustration over the inclusion of unnecessary taxes in the electricity bill, stating that it should stick to the bare bones and only reflect the true charges for energy consumption.

"I managed to cut back on my energy consumption by 16 percent this month, but to my surprise, I still ended up with a hefty bill of Rs 14,919 (49 US dollars) for July. The electricity bill hit me like a ton of bricks, coming in at a whopping Rs 10121 (33 US dollars) for 316 units. And to my surprise, a hefty Rs 4798 (16 US dollars) was added to my bill as taxes, including the sneaky fuel cost adjustment (FCA). Last year in July (2022), I burned through 519 units, while my total bill left me with Rs 14230 (47 US dollars)," Ahmad told Al Mayadeen English.

He expressed his dismay over the fact that the big shots, the top brass, the cream of the crop, and the well-connected fertilizer moguls were getting electricity on the house or at dirt-cheap prices, while the average Joe and struggling folks were left to foot the bill with taxes and skyrocketing power rates.

Expectations from the caretakers

The people were hoping that the interim government would put a stop to the excessive taxes slapped on utility bills and end the special privileges enjoyed by the high-ranking officials. However, their hopes were shattered when they found out that the authorities went back to the IMF to ask for permission to provide some relief to the people.

To add insult to injury, Pakistan's caretaker Prime Minister Anwaar Ul Haq Kakar dropped a bombshell on Saturday, claiming that the military, comprising the Pakistan Army, Navy, and Air Force, wasn't consuming even a smidgen of free electricity. He further asserted that their bills were being settled using the designated financial budget. Amid a nationwide standstill and complete shutdown on Saturday, Kakar brushed off the commotion in the country as a "non-issue", asserting that certain political parties were using it as a "card up their sleeve" in their election campaigns.

Earlier, caretaker Finance Minister Dr. Shamshad Akhtar told the Senate Standing Committee on Finance that the caretaker government is strapped for cash and cannot afford to dish out subsidies. However, she did mention that they are mulling over the idea of cutting off free electricity to the privileged few.

She said that this perception is not true that the caretakers have unlimited options; instead, they have limited options and will work for a defined period. She said that the previous government had made an agreement with the IMF, and the caretaker government cannot do anything in this regard.

These assertions fly in the face of the government's earlier assurances that they were going to take revolutionary measures in the energy sector to provide relief to the masses.

What ails the power sector?

According to the National Electric Power Regulatory Authority (NEPRA), the power industry has been taking advantage of a whopping 340 million units of free electricity each year. Based on their evaluation, a whole bunch of employees—around 189,000 folks—got free electricity units. This is in addition to the millions of units consumed free of charge by a bunch of bureaucrats, generals, judges, and subordinate staff.

The NEPRA acknowledged that the power thieves who have been running amok for the past many years have caused another dent of Rs. 500 billion ($1.7 billion) in the national kitty. The power companies pass the buck of accumulated losses accrued from power theft, line losses, free electricity supply, and transmission line repair and maintenance onto consumers.

Another issue confronting the power sector in Pakistan is the capacity payment to independent power producers (IPPs). The Senate Standing Committee on Power was informed last week that consumers are set to cough up Rs1.3 trillion ($4.3 billion) in capacity payments to idle power plants in the current financial year. Pakistan has struck binding agreements with power plants according to which they will be paid capacity charges even if government companies are unable to take electricity supplies from them.

Inequitable tax system

Pakistan's tax system is heavily loaded toward the affluent class, with scant regard for less-privileged segments of the population.

The poorest of the poor bear the brunt of 80% of taxes in Pakistan, while the upper crust, whose meager contribution to the overall tax pot doesn't even reach 5%, luxuriates in special perks and a lenient tax system. The poor shell out a fortune in indirect taxes on utilities, gasoline, and mobile communication, accounting for a whopping 80% of the nation's tax revenue. The government's kitty was filled with roughly $5 to $6 billion from the pockets of 36 million mobile phone users every year, and a large chunk of them weren't even in the taxable income bracket. The system treats all taxpayers with the same brush, regardless of their income levels. It's a case of "one size fits all" when it comes to indirect taxes on utilities, goods, and services, leaving no distinction between the rich and the poor.

The Federal Board of Revenue (FBR), Pakistan's top tax collection powerhouse, has fallen flat on its face in expanding the tax net, despite repeatedly proposing measures to lighten the load on current taxpayers. The FBR's lackadaisical attitude and nonchalance have added insult to injury for already struggling low-income groups. The shady tax policies of one government after another have driven a wedge between the haves and the have-nots, just like the disparity between apples and oranges when it comes to taxes. Poor households are being squeezed for every penny by the government, even though they barely have two pennies to rub together.