ISLAMABAD: “The sun will shine for the Milbus while the poor will continue to sweat,” was the quote used by policy experts to epitomise the rudderless provisions contained in the mini-budget presented by the incumbent government last week.
These were the views expressed by the speakers representing business community and civil society during a discussion on ‘Amendments in Finance Bill 2018-19’. The discussion had been organised by the Sustainable Development Policy Institute (SDPI) on Monday.
Former senator and Pakistan Peoples Party (PPP) leader Farhatullah Babar termed the budget realignment presented by the Pakistan Tehreek-e-Insaf (PTI) a “disappointment”.
He noted that by withdrawing the condition of filing taxes to qualify for selling or purchasing property in the amended money bill was a path to multiply the number of posh private housing societies in a country which has been pining for affordable housing and other essential commodities for the poor and has given a spurt to Milbus.
“Those who thought that the PTI was ready to implement radical economic plans were shocked that the first cabinet meeting was about placing imprisoned Pakistan Muslim League-Nawaz (PML-N) leader and former prime minister Nawaz Sharif on the exit control list (ECL) instead of announcing plans on how the economy will be uplifted and electoral promises of a welfare state implemented,” he lamented.
In a reference to the PTI’s electoral promises and proclamations by Prime Minister Imran Khan of countering and eliminating corruption, Babar noted that the biggest and easiest form of corruption in the country is deeply rooted in the sale and purchase of real estate.
But with budget measures which allow non-taxpayers and non-filers to purchase expensive land and cars without any question only rewards the corrupt land mafia and legitimises their corruption.
He continued that the incoming PTI government had missed the opportunity to effect real change by deciding against belt-tightening which would see government expenditures slashed.
“A mere five per cent cut on [government expenditure] could have saved Rs250 billion and there would have been no need for Rs90 billion of regulatory duties. But the government followed the easiest route of slashing the development budget by Rs225 billion.”
Moreover, he criticised the government for lacking a spine to re-impose the wealth tax, which had been abolished by former dictator General (retired) Pervez Musharraf.
Economic growth targets can only be achieved only by promoting regional and global trade. But the mini-budget did not even mention trade because driven by security paranoid, the real power brokers employ trade as a weapon of war, he lamented.
PTI Senator Nouman Wazir Khattak sought to defend the mini-budget presented by his party.
He noted that when they came into power, the country’s economy was in a shambles. Hence, he explained, their government raised tax rates on imports of only luxury items to cut the import bill and arrest the economic decline.
Responding to criticism on allowing non-tax payers to buy and sell property unchecked, he said that the government will take concrete measures after due consultation with all stakeholders to bring these people into the tax net.
Pointing out that it has been less than 100 days that the party had taken up the mantle of power in the federal capital, he urged that they should be afforded at least an economic quarter to properly analyse the economic crisis and find ways of assailing it.
“For future taxation measures, we need consultations with stakeholders and also need to take the business community on board,” Khattak said.
Even though Pakistan boasted a growth rate of around five to six per cent, he noted that the country still lags behind the required growth rate of 10 per cent.
In this regard, he said that all growth sectors should be given a comprehensive roadmap on enhancing growth. “Our foreign policy has to be aligned with economy and trade,” he said.
SDPI’s Joint Executive Director Dr Vaqar Ahmed said that the government has tried to keep the income tax structure progressive by maintaining a low rate of tax on lower income groups.
To counter this, he said that the advanced tax rate on transactions through the banking system by non-filers has been increased.
To bring more and more people in the tax net, he said that this measure should be accompanied by a reduction in time and cost of becoming a filer, where all scheduled banks should be allowed the powers to facilitate a willing person to become a filer.
In this regard, Dr Ahmed was of the view that the government should revisit its decision to allow non-filers to purchase property and cars.
Moreover, he said that exemptions and reduced rates allowed in sale tax and customs duty should be time-bound rather than exist for an indefinite period.
He added that a hike on duties has not proven to be a success in curbing non-essential imports and thus does not have bright prospects now.
Dr Ahmed echoed Babar’s sentiments over slashing the size of the development budget. Instead, he suggested that the government should focus on slashing the number of ministries by merging the attached departments.
The government should also aim to remove the current distortions in the tax code such as consolidation of over 60 withholding taxes provisions, over 50 indirect taxes and over a dozen taxes have to overlap with provincial revenue jurisdictions, he added.
Former Rawalpindi Chamber of Commerce and Industry (RCCI) president Dr Shumail Daud Arain said that as the business community, they had fully expected the government to take some tough decisions on taxation. But they were now faced with a precarious situation for taxpayers with the government missing a key opportunity to bring non-filers into the tax net.
Overall measures so far taken by the incumbent government are similar to old budgets and that the mini-budget lacks direction and vision.
His sentiments were echoed by Shaban Khalid, a former president of the Islamabad Chamber of Commerce and Industry (ICCI), noting that the mini-budget fell short of expectations especially as the government failed to increase the tax base.
Moreover, the government’s target of achieving a target of Rs100 billion is sceptical and a threat for the business community since the burden of these taxes will fall on existing taxpayers.
Published in The Express Tribune, September 25th, 2018.