Budget lost in Panama papers?

Government is likely to use upcoming budget to again increase the tax burden on those who are already heavily taxed

The annual budget season this year seems to have been eclipsed by the Panama leaks as the federal government appears to be exceedingly preoccupied with countering the onslaught mounted by the opposition against the prime minister and his family on the issue of ownership of off-shore companies and the question of whether or not the funds used to buy assets overseas were clean and that the way they were transferred out of the country was legitimate. The prime minister has already spoken three times in his defence, whereas his coterie of close aides and ministers also remain preoccupied with the Panama affair. Finance Minister Ishaq Dar, too, since his return from Dubai last week after concluding talks with the IMF, appears to be completely engrossed in the same exercise.

Last year, Mr Dar had chaired more than a dozen meetings on the budget in the first two weeks of May. That’s not the case this year. He has not presided over any budget-related meeting since he returned from Dubai. This is a worrisome situation. More so because the budget is scheduled to be announced on June 3 , preceded by a meeting of the Annual Plan Coordination Committee on May 23 and that of the National Economic Council on May 30. Naturally, the national media as well seems more focused on the Panama leaks rather than on analysing critically the performance of the economy in the outgoing year and projecting the issues in store for the incoming one. Given that Pakistan suffers from a perennial fiscal deficit, it is likely that the government will use the upcoming budget to again increase the tax burden on those segments that are already heavily taxed. However, with the Panama papers revealing details of the rich and powerful in this country, including parliamentarians, possessing assets in tax havens, there could be an outcry if the government went down this path again without doing much to bring the high and mighty into the tax net. If this happens, the opposition is likely to take advantage and put the government under ever-increasing pressure. It is time the government started focusing on important matters of the state like finalising a people-friendly budget. Indeed, the public this time around may not be as supine as it usually is if burdened beyond its capacity.

Published in The Express Tribune, May 22^nd, 2016.

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