In the backdrop of reports that a delegation of the International Monetary Fund (IMF) will land in the federal capital to discuss taxation proposals for the next financial year (2025-2026), Federal Minister for Finance Muhammad Aurangzeb, in an interview, has boosted morale of the general public and the fixed income groups by making blissful remarks about provi-sion of much needed relief to them.
He firmly stated that the government was actively working on reducing electricity bills further by July or earlier, as part of a broader plan to offer economic relief to the people.
The Minister also revealed that a comprehensive relief programme for the salaried class has been developed and will be reflected in the upcoming federal budget.
Understandably, the Finance Minister did not elaborate on his planned relief measures insisting that these will first be taken up with the IMF team as part of the ongoing negotiations.
The linkage of the proposed relief to the prior approval of the global lender raises questions about the final nature and scope of the plan but in recent months the Minister and other members of the Government’s economic team have successfully negotiated with the IMF and defended plans vis-à-vis re-duction in electricity tariffs.
It was in this backdrop that Prime Minister Shehbaz Sharif, last week, announced a cut in power rate by Rs.7.41 per unit and held out an assurance of further reduction in future.
The remarks of the Finance Minister sug-gest that the Government has active proposals to reduce the electricity tariffs further, which is surely good news for all citi-zens and a good omen for the national economy.
However, the Government has a daunting task ahead to ensure a trickle-down effect of the reduced tariff rate in view of the track record of our business community to pocket the entire mar-gin/profit.
This is a serious issue as transporters, industrialists and service providers did not lower prices of their products and services commensurate with the reduction in the prices of petroleum products.
There are prospects of a substantial reduction in fuel prices in Pakistan for the next fortnight in view of a steep fall in the prices of oil in the international market, especially after imposition of massive tariffs by the United States on imports from other countries.
This relief together with cuts in power tariffs should have a salutary impact on the overall price situation but this requires strong and continued vigi-lance by local administrations and provincial governments.
The announcement regarding preparation of a comprehensive relief package for the salaried class is also a welcome development and hopefully this will materialize during presentation of the budget in the same spirit.
The Government now has a fiscal space because of increased tax collection, improved macro-economic indicators and restructuring of ministries and departments and is, therefore, in a position to provide a fair relief to its employees and pensioners.
As for the consultative process for preparation of the budgetary proposals, this has been a routine exercise every year but with a difference this time round.
The Finance Minister has emphasized that the preparation of the budget is being carried out in close coordination between the government and private stakeholders and that relevant parties will be informed beforehand which of their proposals are being incorporated and which are going to be rejected and why.
Once proposals are finalized and incorporated in the budget, these will be enforced from July 01 (beginning of the new financial year) and no change will be made to ensure timely and effective implementation.
This is important in view of the fact that some proposals are withdrawn or amended during the year in the face of stiff opposition or resistance by relevant pressure groups.
A case in point is the oft-repeated plans of the successive governments to bring retailers into the tax net but the cherished objective remains unfulfilled due to non-cooperation of the community with negative consequences for the salaried and other tax-paying segments of the society.
