IN the backdrop of the consistent reports that the government might go for a mini-budget in view of gaps in revenue collection, Finance Minister Muhammad Aurangzeb has said there was no proposal under consideration ‘at the moment’ for taking any additional revenue measures.
Talking to newsmen in Islamabad on Wednesday, he, however, said there was a commitment with the International Monetary Fund (IMF) to achieve a tax-to-GDP ratio at 11 percent for the current financial year and the government will comply with it.
Tax-to-GDP ratio in Pakistan is one of the lowest in the world as for developed countries it is about 34% while the average for Asia-Pacific region was 19.6%. There is a definite need to increase this ratio as it would ultimately lead to lessening of crippling dependence on foreign loans. However, the authorities in Pakistan should relate these targets to ground realities as on the one hand the government is backtracking from its responsibility to ensure even provision of basic services to citizens and on the other hand it is placing the tax burden on the existing payers and the common man. We have been emphasizing in these columns that instead of imposing new taxes or increasing the rates of the existing ones, the authorities should concentrate on tax evasion and under-filing. Some segments of the society are having lavish lifestyles but they are contributing either nothing or negligible to the national kitty. The repeated failure of the government to make them pay their share is a mockery of the writ of the state and this failure leads to exploitation of the existing tax payers. The statement of the Minister is welcome but it is not a categorical one and leaves room for such an eventuality in future. Policies of the government vis-à-vis exchange rate and pricing of the POL products are already compounding the inflationary situation and people’s capacity to absorb such shocks has exhausted. Already annual inflation in September jumped to 5.6%, nearly double the previous month and the highest in ten months and this trend is likely to continue because of the situation arising out of devastating floods. The country, therefore, can hardly afford any mini-budget and instead focus should be laid on enforcement and elimination of corruption.
