The biggest giveaway in the budget was the salary increase of 15 per cent.
CHANTILLY, VA, US: Farahnaz Ispahani’s article of June 14 titled “The budget: Populism vs realism” is good overall. The fact that there are 700,000 tax avoiders who have a fondness for the high life but no national tax number is a cruel joke on those who do pay their taxes.
However, is that all we have been able to uncover after looking for 63 years? And how much does the FBR, a hopelessly corrupt institution itself, hope to get out of these fat cats? And, more importantly, how much will they actually deposit in the government account? Or will they turn out to be just like the equally corrupt ‘withholding agents’ who are still, for example, taking zakat and tax out of my late mother’s dividend warrants (they are still in her name) and are not depositing them in the government account?
The FBR chairman says the ‘tax-gap’ (a measure of tax evasion) is 79 per cent. That means four-fifths of the taxes imposed are not collected. They simply vanish, lining the pockets of the corrupt or sit in tax havens abroad. With those kinds of numbers, we are mortgaging the country’s future.
The biggest giveaway in the budget, which surprised me and other economists, was the salary increase of 15 per cent. I say giveaway because it will cost the federal, provincial and local governments some Rs60 billion! Furthermore, rather than chase past inflation, we should be focused on getting future inflation down. This will make it harder if there is ‘wage-push’ inflation on top of food and oil price-push inflation.
As for pointing fingers at Senator Ishaq Dar, there really is no need. All finance ministers have been to the IMF, hat-in-hand, at one time or the other, to try and con it into giving us another loan against our false promises. The last I met Mr Dar is right after the Yellow Cab scheme (now back in Punjab!) had bankrupted the economy and left us with $150 million of reserves, about enough to cover a day or two of imports. I do not recall the precise year.
Not to mention the PML-N’s ‘no-questions-asked-and-no-tax’ foreign currency accounts which was the biggest money-laundering operation launched in the history of Pakistan, sanctioned by the state and guaranteed by the State Bank. There were $11 billion of these demand liabilities set against $1.1 billion of reserves. That is not a way to run an economy and they found out the hard way, as we always do.
Thank God this government has not come up with such hare-brained schemes. At least not so far.
As for the Punjab government’s threat of giving up foreign loans from the US or anywhere else, no one takes that seriously.
Dr Meekal Ahmed
Published in The Express Tribune, June 15th, 2011.
