ADVISOR to Prime Minister on Finance Dr Abdul Hafeez Shaikh seems to be clear headed as the time is fast approaching for presentation of budgetary proposals for the next financial year. At a presentation given by FBR on the new budget, he gave directions for striking a balance between new taxes and relief for different sectors of the economy and segments of the society.
Media reports about what transpired in the crucial meeting indicate that there was no possibility of a tax-free budget as was earlier believed and that people will have to be ready for additional taxation. This is understandable as the country was passing through a worst challenge thrown by Covid-19 and a situation has developed where there was more demand and need for relief but the revenue resources were drying up due to lack of economic activity. The Government has already announced a record Rs 1200 billion relief package for different sectors in a bid to stimulate the economy. In a related development, the Economic Coordination Committee of the Cabinet (ECC), on Wednesday, approved a 50 billion rupee package for agriculture sector that is expected to go a long way in reducing the cost of input for farmers, a policy that would surely benefit both the farmers and people of Pakistan. Under these circumstances when the Government has already unveiled a number of programmes and plans for provision of relief to different sectors, it would be unjust to expect more in the coming budget when the authorities are facing the daunting task of boosting revenues. The Government deserves credit for controlling expenditure and bringing down the trade deficit and together with sharp reduction in oil prices and increase in home remittances by Overseas Pakistanis, the authorities are in a position to manage things despite constraints. However, instead of trying to put additional burden on the existing tax payers, new avenues should be explored for increasing revenue as has also been proposed by experts repeatedly. If one pays his/her income tax honestly, there is hardly any justification to consider proposals like levy of wealth tax on movable assets as this would have more negative implications than any meaningful benefit. Salaried people and pensioners are hard-pressed due to unprecedented loss of their purchasing power in the face of steep rise in inflation; therefore, they are rightly expecting a handsome increase in pay and pension. Budgets of federal and provincial governments should also focus on developmental activities as these would create much-needed employment opportunities.
