Since the independence, governments have been saying ‘ Budget will be according to the hopes of people’, but it seems now that IMF has taken the responsibility to devise such a budget.
The current economical condition of the country dictates that stern actions must be taken to overcome all the crisis in which country is deeply stuck in.
However, like previous years, this year too Finance Minister, Mr. Ishaq Dar is calling this budget “Nation Friendly” but the truth is that whatever government’s is doing is clear manifestations of abidance to IMF’s conditions.Government seems to be determined to fulfill its promises that it has made with the IMF and World Bank in consideration of loans.
In coming budget, the primary focus of the government will be to implement the IMF’s plan but at the same time government will also try to help people to ease their economical condition.
The government’s first priority is to decrease budget deficit, which is now at the level of 6.75%. In this instance, government will make sure that this deficit be brought down to the level of 4.8% till the end of year. This objective can only be achieved when non-productive expenditure will be curbed.
The second thing which government is focusing is to increase indirect tax by taxing more items which are of essential need to the common man.
For increasing government revues through Federal Board Revenue (FBR) government had set the target of collecting revenues of Rs. 2598 billion but this target couldn’t be achieved. Then the target was revised to collecting Rs. 2275 billion, that too, unfortunately couldn’t be achieved.
In upcoming budget, government is giving itself a target of collecting taxes which amounts to Rs. 2810 billion. Let’s see how the government will meet new target. No doubt, If government succeeds in achieving this target, it will be very encouraging for the betterment of Pakistan’s faltering economy.
Ironically, Sugar Mills are taxed at the rate of 8% whereas common employee is taxed at 17%. An employed person ends up with difficulties to manage his household expenditure let alone thinking of saving for the future. On the other side the owners of sugar mills are multiplying their wealth.
The reason for such a low tax levied upon sugar mills is given that this low tax is to give relief to the people. Its kind of subsidy you may say.
In case, if government decides to bring the tax rate for sugar industries equal to the normal tax i.e 17% then it will definitely increase the price of sugar. Currently per kilo of sugar fluctuates between Rs. 55 and 60. Just imagine where the prices of sugars will reach provided tax is doubled upon sugar mils? What steps will government take if sugar mill owners raise sugar price this is yet to see.
Either you are living under the poverty line or are above it, all have to think about increasing their income capacity. Because it can be clearly seen that inflation in coming times will remain quite higher and if you didn’t increase your income capacity, your house economy will be drastically crashed.
It was indicated by the government that this year no such proposal is under consideration for increasing salaries of government employee. In reaction government employees from officers to clerks had staged protest for not increasing their salaries. Succumbing to the protests, Finance Minister has announced with a faint – heart that Government will raise government employees salaries by 10% and for pensioners 15% rise will be given.
On one occasion Mr. Ishaq Dar enunciated that ‘ Now the definition of being poor be changed. According to him the poor is one who earns less than $2/day.
By giving this justification, Finance Minister is putting an extra burden of Rs. 535 billions on the people of Pakistan. Because increase in indirect taxes affects whole the nation. Indirect tax is on everything, from a match box, to mobile card: Everythign that a common man buys, first he pays tax on it. The most affected classes will be the middle class and the poor ones because they are the people who don’t have any such income upon which they can pay the tax. Government finds it easy to collect indirect tax than collecting direct tax.
Government has also assured IMF that it will relinquish all the subsidies thus easing down burden on government treasury. This will result in growth of GDP at the percentage of 5.3%.
Government is also looking for putting off the subsidy on electricity. From now on there will be no subsidy for consumers who are consuming less than 200 units of electricity.
Increase in salaries only by Rs.2000/ per employed person will benefit few million working class people. It is no exaggeration to say that Rupees 2,000 in this high inflation age is by the way too small but uplifting subsidies will be a mighty blow on the face of people who are higher in numbers than employed people.
Government must take actions to give relief to the common man. This can be done by levying tax on the people who can afford taxes. System for collecting direct taxes be made functional. In short only rich should be taxed and relief be given to the poor.
This article was published in Urdu language in Jung newspaper by the author Saheeb Marghoob.