THE National Assembly, on Thursday, passed the Finance (Supplementary) Bill 2021amending several laws relating to taxes and duties and paving the way for the sixth review of the IMF package that would enable release of $1billion tranche.
The bill is aimed at facilitating domestic economic stability, supporting sustainable growth and avoiding repeated booms and busts that have characterized Pakistan’s past and led to painful consequences in terms of higher inflation, higher poverty and lower growth.
Another bill passed by the house balances the provision of necessary operational and financial autonomy to the State Bank with a new mechanism for enhancing transparency and strengthening accountability.
Given the adverse reaction that the ‘mini budget’ triggered, it was considered to be a Herculean task for the Government to get it cleared from the house, especially when reservations were also expressed by its allies.
However, the majority the Government mustered for passage of the two bills sent a clear message that its numerical superiority was intact in the House and that it continues to enjoy confidence of the allies despite gesturing by the Opposition.
The Opposition raised many objections but credit goes to Finance Minister, Shaukat Tarin, who gave crisp but pointed replies to the satisfaction of the House and people of Pakistan.
One of the main objections was that the bill would lead to yet another wave of price-hike because of new taxation measures and withdrawal of subsidies but the Minister categorically stated that it was not motivated by income generation but to promote documentation of the economy, which remained declared objective of the every government in the past as well.
He rightly pointed out that there were people and segments of the society that earned hugely but are not paying their due taxes in the absence of documentation.
Contrary to the general impression that the mini-budget seeks to impose taxes worth Rs.343 billion, the Finance Minister explained that taxes of just seventy billion rupees have been proposed on luxury items in the bill which will have no effect on common man as a refund of 280 billion rupees will be given and as a consequence there should be no impact of taxation to this extent.
It is also encouraging that Shaukat Tarin listened to the justified criticism of the proposals to tax food and some other vital items.
The widely criticized proposals to withdraw subsidies on laptops, baby-milk, bread, bakery items, pesticides, solar panels and digital payments were withdrawn and the Minister also assured the House that prices of medicines will not increase.
No doubt, some of the measures envisaged in the bill might add to the inflationary pressure on the masses but tough decisions have to be taken to put the economy of the country on the right track and increase revenue collection.
Already, the revenue collection has increased by 35% due to prudent policies of the Government and receipts would obviously increase if the GDP growth reaches 5% as envisaged by the economic team of the PTI Government.
Remittances have also touched an all time high and exports are also picking up due to right policies and incentives.
There is no doubt that in normal circumstances, there should be no mini-budget as such moves during the course of the year create confusion and breach trust of the people as well as investors.
However, these are not normal circumstances and the Government is striving hard to enable the country to stand on its own feet financially and economically as this is the only viable course to safeguard and protect our political sovereignty.
The Opposition is criticizing the measures contained in the mini-budget but unfortunately, during discussions on the bill, failed to offer alternative proposals that could advance the cherished objective of increasing the revenue collection and promoting documentation of the economy.
Referring to the objections raised against the State Bank of Pakistan (Amendment) Bill, the Finance Minister clarified that the central bank would be governed by a Board of Governors and the Pakistan government would have full authority over the institution.
He recalled that IMF imposed a restriction of giving autonomy to State Bank of Pakistan (SBP) because the last governments borrowed Rs7.5 trillion from the SBP.
The passage of the two bills has cleared the way for continuation of smooth relationship with the IMF but we do hope that the Finance Minister would see to it that the proposals envisaged in the mini-budget are not exploited unduly by industrial and commercial sectors to add to the miseries of the people.
