WINDING up debate on the budget for the next financial year, Finance Minister Muhammad Aurangzeb delivered an impressive speech to apprise the parliamentarians of the ground realities and what the government was doing to address the economic malaise. He strongly defended some of the measures announced by the government in the new budget but could not offer justification for others that have put an additional burden on the existing tax-payers and down-trodden segments of the society.
In a democratic polity, budgetary proposals are thoroughly debated by parliamentarians and adjustments are made in the light of their input and this practice is also followed in Pakistan where not only members of the National Assembly but Senators as well are involved in the process despite the fact that the upper house has no say as far as the money bills are concerned. Some of the budgetary proposals for the financial year 2024-25 evoked strong reaction from the people and relevant stakeholders and voices were raised from both the houses to review them. The Senate transmitted its recommendations in written form and these also included on issues of serious concern for the general public but regrettably the government ignored the interest of the common man and listened to the grievances of the powerful and influential lobbies. This is evident from the fact that the Finance Minister skipped mentioning recommendations regarding withdrawal of GST on packaged milk, increase in FED on cement and lowering of tax burden on salaried class but succumbed to the pressure to continue with the prevailing reduced tax rates for hybrid vehicles and continuation of zero rating for local suppliers.
The price of the packaged milk, which is considered safe and hygienic, is already on the higher side and imposition of 18% GST would push it beyond the reach of the common man. Similarly, cement prices also witnessed phenomenal increase during the last two years and with this in view the government should have taken measures to incentivize reduction of its price but instead FED has been increased by Rs. 50 a bag. The decision of the government to keep stationery items exempt from tax as well as continuation of sales tax exemption for charitable hospitals is a step in the right direction. Similarly, the decision to give an opportunity to the non-filers for a personal hearing before implementing the measures of SIM blockage and a ban on foreign travel might help provide relief to genuine non-filers. We have all along been emphasizing in these columns that structural reforms and increased revenue collection are noble objectives as these would reduce crippling dependence on foreign aid, which comes at a price. However, there are differences on the modus operandi to realize these objectives as voices of reason call for a judicious approach but the Government sticks to the traditional policies of favouring the elite at the expense of the poor and the middle class. The Minister stated that the federal budget aims to reduce the fiscal deficit by focusing on increasing resources and cutting unnecessary expenses, adding immediate measures will target downsizing the federal government and curbing resource wastage, continuing the Prime Minister’s directive for simplicity and austerity. However, the position would become clear when recommendations are made by the austerity committee headed by the Finance Minister himself and whether or not the government implements them in letter and spirit. The government is also pinning too much hope on privatization but success of the process is doubtful in view of the market conditions as well as past experience of creation of monopolies in various sectors to the disadvantage of the general public. As for expansion of the tax net, success of the FBR’s Tajir Dost Scheme would be a litmus test of the resolve of the government in this regard.
