Historic moment as Pakistan's elected civilian government completes full five year term

There are still challenges to be overcome, but merely surviving is something of an achievement.


This weekend saw a historic moment for Pakistan, as a democratically elected civilian government completed its full five year term for the first time ever. In the past, governments have been ousted by the military or by rivals. The moment passed relatively quietly, with a televised farewell address from the prime minister Raja Pervaiz Ashraf on Sunday. In an understated address, he conceded that his government had not done enough during the last five years, but maintained that it had lessened the problems it had inherited. He also said that the historic completion of a full term marked the end of a “sinister chapter” of attacks on democracy. "We have strengthened the foundations of democracy to such an extent that no one will be able to harm it in future," he said.

Many judge the government’s main achievement to be surviving at all. This was no small feat. At the beginning of the five year term, few observers thought that the leading coalition would last more than a year. Asif Ali Zardari was seen as an accidental president, who ended up in this position of power only because of the assassination of his wife, Benazir Bhutto. While Zardari remains unpopular, he has gained a reputation as a canny politician and dealmaker, who kept an unruly coalition together against the odds, despite junior partners frequently breaking away or demanding greater concessions.

There has been a lot of focus on the negative legacy that this government has left behind. Pakistan is in the throes of an energy crisis, with power cuts plaguing large swathes of the country. (As I write this, from the capital city Islamabad, the power has gone off for the fourth time today). Terrorist violence has increased, not reduced, a trend which has not been helped by the lack of a coherent government anti-terrorism strategy. Attacks against religious minorities continue with impunity – from mob attacks against Christian communities to targeted militant violence against Shias. Economic growth is sluggish, while corruption is rife and tax bills low.

Yet on the flipside, the positives should not be overlooked. The level of media freedom enjoyed in the last five years has been unprecedented. Although there were some exceptions, in general, the political opposition and media organisations have been able to say what they want. This has resulted in a lot of mockery and criticism of the present government, to a degree that would have been unthinkable in the past. There have also been significant steps forward in the area of constitutional reform, with greater devolution of power to provincial governments and changes to improve electoral practice.

For months, rumours have circulated that the election will be delayed or cancelled altogether. While I was living in Karachi last year, practically every social gathering featured someone declaring that they knew the election wouldn’t be happening for some reason or another. This demonstrates deep-seated public disbelief that this moment would ever come to pass; a psyche borne of decades of last minute interceptions and power grabs.

The challenge is far from over. Now that the National Assembly has dissolved, the ruling parties are in the process of establishing a caretaker government which will run the country while the Election Commission gets things in order. Shoring up the security situation to reduce bloodshed from terrorist attacks during the polls will be a priority. The election schedule has not yet been announced and rumours still proliferate that the caretaker set up will be extended and elections held off for a year or even two.

The crucial point is that for all the misgivings about the present government, the Pakistani public will, for the first time ever, have the chance to express these feelings through the ballot box. The significance of that cannot be underestimated.

President Asif Ali Zardari. Photograph: Getty Images

Samira Shackle is a freelance journalist, who tweets @samirashackle. She was formerly a staff writer for the New Statesman.

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Q&A: What are tax credits and how do they work?

All you need to know about the government's plan to cut tax credits.

What are tax credits?

Tax credits are payments made regularly by the state into bank accounts to support families with children, or those who are in low-paid jobs. There are two types of tax credit: the working tax credit and the child tax credit.

What are they for?

To redistribute income to those less able to get by, or to provide for their children, on what they earn.

Are they similar to tax relief?

No. They don’t have much to do with tax. They’re more of a welfare thing. You don’t need to be a taxpayer to receive tax credits. It’s just that, unlike other benefits, they are based on the tax year and paid via the tax office.

Who is eligible?

Anyone aged over 16 (for child tax credits) and over 25 (for working tax credits) who normally lives in the UK can apply for them, depending on their income, the hours they work, whether they have a disability, and whether they pay for childcare.

What are their circumstances?

The more you earn, the less you are likely to receive. Single claimants must work at least 16 hours a week. Let’s take a full-time worker: if you work at least 30 hours a week, you are generally eligible for working tax credits if you earn less than £13,253 a year (if you’re single and don’t have children), or less than £18,023 (jointly as part of a couple without children but working at least 30 hours a week).

And for families?

A family with children and an income below about £32,200 can claim child tax credit. It used to be that the more children you have, the more you are eligible to receive – but George Osborne in his most recent Budget has limited child tax credit to two children.

How much money do you receive?

Again, this depends on your circumstances. The basic payment for a single claimant, or a joint claim by a couple, of working tax credits is £1,940 for the tax year. You can then receive extra, depending on your circumstances. For example, single parents can receive up to an additional £2,010, on top of the basic £1,940 payment; people who work more than 30 hours a week can receive up to an extra £810; and disabled workers up to £2,970. The average award of tax credit is £6,340 per year. Child tax credit claimants get £545 per year as a flat payment, plus £2,780 per child.

How many people claim tax credits?

About 4.5m people – the vast majority of these people (around 4m) have children.

How much does it cost the taxpayer?

The estimation is that they will cost the government £30bn in April 2015/16. That’s around 14 per cent of the £220bn welfare budget, which the Tories have pledged to cut by £12bn.

Who introduced this system?

New Labour. Gordon Brown, when he was Chancellor, developed tax credits in his first term. The system as we know it was established in April 2003.

Why did they do this?

To lift working people out of poverty, and to remove the disincentives to work believed to have been inculcated by welfare. The tax credit system made it more attractive for people depending on benefits to work, and gave those in low-paid jobs a helping hand.

Did it work?

Yes. Tax credits’ biggest achievement was lifting a record number of children out of poverty since the war. The proportion of children living below the poverty line fell from 35 per cent in 1998/9 to 19 per cent in 2012/13.

So what’s the problem?

Well, it’s a bit of a weird system in that it lets companies pay wages that are too low to live on without the state supplementing them. Many also criticise tax credits for allowing the minimum wage – also brought in by New Labour – to stagnate (ie. not keep up with the rate of inflation). David Cameron has called the system of taxing low earners and then handing them some money back via tax credits a “ridiculous merry-go-round”.

Then it’s a good thing to scrap them?

It would be fine if all those low earners and families struggling to get by would be given support in place of tax credits – a living wage, for example.

And that’s why the Tories are introducing a living wage...

That’s what they call it. But it’s not. The Chancellor announced in his most recent Budget a new minimum wage of £7.20 an hour for over-25s, rising to £9 by 2020. He called this the “national living wage” – it’s not, because the current living wage (which is calculated by the Living Wage Foundation, and currently non-compulsory) is already £9.15 in London and £7.85 in the rest of the country.

Will people be better off?

No. Quite the reverse. The IFS has said this slightly higher national minimum wage will not compensate working families who will be subjected to tax credit cuts; it is arithmetically impossible. The IFS director, Paul Johnson, commented: “Unequivocally, tax credit recipients in work will be made worse off by the measures in the Budget on average.” It has been calculated that 3.2m low-paid workers will have their pay packets cut by an average of £1,350 a year.

Could the government change its policy to avoid this?

The Prime Minister and his frontbenchers have been pretty stubborn about pushing on with the plan. In spite of criticism from all angles – the IFS, campaigners, Labour, The Sun – Cameron has ruled out a review of the policy in the Autumn Statement, which is on 25 November. But there is an alternative. The chair of parliament’s Work & Pensions Select Committee and Labour MP Frank Field has proposed what he calls a “cost neutral” tweak to the tax credit cuts.

How would this alternative work?

Currently, if your income is less than £6,420, you will receive the maximum amount of tax credits. That threshold is called the gross income threshold. Field wants to introduce a second gross income threshold of £13,100 (what you earn if you work 35 hours a week on minimum wage). Those earning a salary between those two thresholds would have their tax credits reduced at a slower rate on whatever they earn above £6,420 up to £13,100. The percentage of what you earn above the basic threshold that is deducted from your tax credits is called the taper rate, and it is currently at 41 per cent. In contrast to this plan, the Tories want to halve the income threshold to £3,850 a year and increase the taper rate to 48 per cent once you hit that threshold, which basically means you lose more tax credits, faster, the more you earn.

When will the tax credit cuts come in?

They will be imposed from April next year, barring a u-turn.

Anoosh Chakelian is deputy web editor at the New Statesman.