Budget – A test for government

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PRESENTATION of a balanced and welfare-oriented budget for financial year 2022-23 is a big challenge to the new Government in the face of resource constraints, pressure from the International Monetary Fund (IMF) to undertake some tough measures, expectations of the people in view of backbreaking inflation and political instability caused by unending friction and tension between the Government and the Opposition as PTI is banking upon protest politics and propaganda campaign as per its policy of keeping the other side under constant pressure.

We have been emphasizing in these columns, time and again, that PML(N) has a strong and experienced economic team but its hands are tied due to political expediency.

Based on intensive consultations with different stakeholders, as had been the practice in the past, broad contours of the national budget should have been visible by now but focus was deflected due to political uncertainty and future of the incumbent Government, which has now received a boost after the flopped long march of the PTI.

However, it is a foregone conclusion that the tax-net will have to be expanded and in this regard the Government leadership has made it clear that the objective will be achieved without burdening the salaried class and pensioners further.

A new wave of inflation has been triggered by the latest increase in the price of POL products (which is likely to go up further in coming weeks in line with the price of crude in the international market) and, therefore, fixed income groups expect some relief.

However, if relief is not possible, at least salaries and pensions should not be taxed further as is being demanded by the IMF.

There is room for increasing tax collection significantly by plugging loopholes and taxing traders and professionals, who are minting money but many of them are not even tax-payers.

There are powerful lobbies that strive to squeeze maximum benefits from the Government every year but are not ready to pay their due share of taxes and it is to be seen whether the coalition Government has the necessary will to confront them.

Development budget is always reduced under external pressure despite the fact that this plays a fundamental role in generating economic and employment opportunities.

Pakistan is an agrarian country but unfortunately it has to import even basic food items like wheat and sugar and, therefore, farmers must be given necessary incentives to grow more.

Similarly, sectors like IT, telecom and electronics have the potential to help resolve economic and financial woes of the country provided these are developed on modern lines and policies remain unchanged for a longer duration.

We are also weak on the R&D front and import substitution despite the fact that the country can save huge precious foreign exchange if research and transfer of technology is prioritized.