Allocations for the Public Sector Development Programme have been significantly increased, but it mainly depends on borrowed money or grants. PHOTO: APP
Speaking at a post-budget seminar held by SDPI in Islamabad, Suleri said a peoples’ friendly budget was expected, but the government clearly avoided that.
“A spending spree could have been expected on the part of the government,” he said. “However, the reluctance to take popular measures is somehow a reflection of the government’s confidence to get re-elected in next year’s general elections.”
The executive director emphasised that the widening current account deficit and trade deficit should be the areas of prime concern for the government.
“A thorough analysis of the Budget 2017-18 suggests a scenario where the government is depicting stability, but lacking sustainability in terms of economic viability,” he said.
He added allocations for the Public Sector Development Programme had been significantly increased, but it mainly depended on borrowed money or grants.
Speaking on the occasion, SDPI Deputy Executive Director Dr Vaqar Ahmad said a rational budget should reduce inequalities through the use of different instruments.
“The objective of reducing inequalities could be achieved by phasing out federal excise duty, simplification of general sales tax (GST) regime and reduction in GST rates as well as lowering the customs duty on inputs and finished goods used by the poor,” he said. “Unfortunately, the budget has missed these critical measures.”
He said recent literature on tax incidence also suggested that the reduction in indirect tax had a pro-poor impact if relief was provided in the consumption of food, fuel, cooking oil, bread, milk, fruits, tea, sugar and vegetables.
“Regrettably, the plethora of indirect taxes and withholding taxes has continued to accentuate income and consumption inequalities. This year again, over 60% of revenues of the Federal Board of Revenue are envisaged to arrive from indirect taxes.”
Similarly, SDPI Senior Research Fellow Dr Sajid Amin shed light on various aspects of the Budget 2017-18 and said the improvement in macroeconomic indicators was hard to explain based on fundamentals of the economy as exports, national savings and debts recorded deterioration in the outgoing fiscal year.
Additionally, he said the budget did not offer much to resolve the structural problems in the economy.
Published in The Express Tribune, May 30th, 2017.
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