Debt and dictates

The subsidiary finance bill laid before a joint sitting of both the houses of parliament is a precipice to disaster. Compelled under the dictates of the International Monetary Fund, the beleaguered coalition government believes that it has no recourse but to tax the masses, and keep on buffering up the revenue. That is neither a viable option, nor is it going to be a feasible one as inflation soars to an all-time high and the rupee defaced under the might of the greenback. The crucial tax amendment bill — primarily a mini-budget aimed at raising at least Rs170 billion — was earlier scheduled to be bulldozed as an Ordinance, but its shooting down by the Presidency has landed it in the maneuvered straits of the parliament. To what extent will it salvage the economic order, even if it is legislated, and revive a stalled loan programme is up for debate.

The salient features of the new intrusion are nightmarish. It will lead to GST being enhanced from 17 to 18 per cent affecting the prices of daily-use items; withholding tax on wedding halls; an auxiliary rise in many of the luxury products, including cigarettes, sugary drinks and air travel; and last but not least, a pinch of federal excise duty on cement which will further raise an already high construction cost. This comes close on the heels of an exalted four to six slab tariff raise on gas and electricity prices, and a devastating midnight rise in petroleum products to the tune of 9 to 12 per cent. The new price of petrol is Rs272 per litre while that of diesel has shot up to Rs250 and kerosene to Rs202.73. This off and on messing up of lifeline benchmarks is owing to the fear that the country’s foreign exchange reserves have depleted to a deadly $2.9 billion, which is not enough to dovetail a week or so of foreign expenditures. While the common man is being dumped with all the burden, the bitter reality is that the elite continues to go scot-free and no evident cut is visible in their kingly lifestyles nor a slash in their state-centric perks and privileges.

This module of borrow and adjust is untenable. It has neither worked in the past, nor is it going to work now. Of course, this is not our first programme with the IMF, as a last resort lender. We have been with the global lender now for decades. Unless we harness our resources to make up for the budget deficit, and tap the generosity of the diaspora and investors — and that too on a sound-footing of legislative economic security — we will remain in the quagmire of debt and dictation. The methodology of taxing the lower and middle strata with money bills will soon become a politically counter-productive exercise. The least we can do is to instantly create a pool of manpower talent in various vocations in demand abroad and ship them out. It will have a telling positivity on coffers. Time to stop, and rethink.

Published in The Express Tribune, February 17^th, 2023.

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