THE government has reasons to be satisfied as toughest budgetary proposals for the next financial year attained legal status after passage of the Finance Bill by the National Assembly amid walkout by the opposition. It was ironic that at a time when the general public as well as the sectors directly hit by some of the proposals were expecting some relief in the final version of the budget, the government instead imposed taxes worth Rs. 200 billion over and above those announced by Finance Minister Muhammad Aurangzeb while presenting the budget in the National Assembly. The opposition justifiably complained that the new budget, prepared in close coordination of the International Monetary Fund (IMF), would compound inflationary situation (this has also been acknowledged by the government by revising upward the inflation target for the next financial year from 12 to 13.5%), inhibit potential growth of important sectors like real estate, IT, agriculture and industry, force fixed income groups to compromise on their quality of life due to additional tax burden and accelerate both brain-drain and shifting of offices of companies abroad in the face of excessive taxation.
It is a matter of great concern that an elected government has shown apathy towards the plight of the common man as confirmed by the reaction of the authorities concerned to the popular demands for withdrawal of 18% GST on packaged milk, the prices of which are already on the higher side and an increase on FED rate on cement from two to three percent. Instead, the government hiked the rate of the FED by two percent in the final version of the budget which would result in significant increase in the cost of construction, making it more difficult for citizens to realize their dream of having a house of their own. Similarly, the justification offered by the Minister for slapping unreasonable GST on packed milk is also not plausible. As more and more people prefer using packed milk, the measure would affect millions of families besides increasing the cost of child rearing as tax exemption on infant milk has also been withdrawn. In a country where rule of law is a constant casualty, milkmen would surely increase the price of the loose milk in line with a tax-driven increase in the price of packed milk, putting further strain on the common man. Imposition of 5% FED on the lubricant oil, together with the decision to jack up the rate of petroleum levy from the existing Rs. 60 to 70 per litre on oil would also trigger inflation. The decision to impose 18% GST on vegetables and fruits imported from Afghanistan is also retrogressive as it would take away the benefit of trade with immediate neighbours. Imposition of CVT on farm houses and big residential houses in Islamabad is understandable but there was absolutely no justification to shower tax exemptions to the banking industry, which is earning huge profits and not sharing them judiciously with their depositors. One notable change in the approved budget is the exemption from advance tax on the sale or transfer of immovable property under Section 236C for retired and serving federal and provincial employees, retired and serving defence forces personnel and individuals injured in war. This would provide some relief to fixed income groups and senior citizens but imposition of 3% FED on allotment or transfer of property by filers and 5% for non-filers would take away the potential relief. No one would differ from the Finance Minister when he emphasizes the need for stabilization of the economy but the strategy to achieve this cherished objective remains flawed as before. The government has miserably failed to expand the tax net and instead resorted to the same old practice of putting more burden on existing tax-payers and salaried individuals. This has been acknowledged by the Finance Minister himself who said the salaried people are paying more tax than the entire export sector. Who will introduce real changes in the system?
