Governing alliance’s members presents shadow budget

The Muttahida Qaumi Movement-Pakistan (MQM-P) on Tuesday presented its shadow budget, promising relief for the common man by saying that the prices of petrol, gas and electricity as well as essential food items will be lowered.

The MQM-P, which is an ally of the PML-N-led ruling coalition, also vowed to provide subsidies on flour for urban slums and quarter settlements, pledging that it will also take low-cost housing initiatives to promote affordable housing for low-income individuals and families.

Admitting that price hike and inflation were the “monsters” killing the economy today, the key government ally has demanded through the shadow budget that the government should increase minimum wage to Rs40,000 per month to offset the impact of inflation. 

“Pakistan's salaried class bears a disproportionate tax burden, paying tax on gross income without deductions,” the MQM-P stated, saying the heavy burden has forced around 800,000 individuals to emigrate. To address this issue, it said, tax rates for salaried individuals will be rationalized by taxing only the basic income, and tax credits for investments should be reinstated.

“We believe that a national consensus on a charter of economy during the next fiscal year will be the corner stone of the future and growth of the economy,” the MQM-P stated in the document, saying that income generation and cutting down expenditures can reduce the budget deficit. 

“The true sovereignty of a country and its people in their economic independence, the MQM-Pakistan intends to make its people economically independent and economically sovereign,” MQM-P Convener Dr. Khalid Maqbool Siddiqui stated in the budget document. 

The budgetary proposals for the federal budget 2024-25 are proposed by the Muttahida Business Forum, believing that the budget is not merely a document of aggregated information on revenues and expenditures of the federal government but is also an indicator of the economy and the country’s future and growth. 
Through the shadow budget, the party has also highlighted the areas that require more focus. For instance, it says, the 2023-24 growth rate is hardly 3%, one of the lowest in 77 years after Independence, saying the MQM-P will take measures to increase the growth rate to 4% to 5% in the year 2024-25.

The party also said that the fiscal deficit between income and expenditure of the year 2023-24 is one of the highest fiscal deficits, i.e. 6% to 7% of GDP, vowing that MQM-P will work to decrease the fiscal deficit to 3 to 4% of GDP in the next financial year.

It also admitted that the lower and middle class of the country is groaning under the pain of unprecedented unemployment, 5.6 million out of job, and skyrocketing price hike of 20.7%. High interest rates and a deliberate “demand destruction” strategy to curb 50-year-high inflation have led to widespread factory closures and rising unemployment, it said, adding “import restrictions to control the current account deficit have badly hit the manufacturing sector.”

It says MQM-P is determined to broaden the tax base without imposing new taxes or increasing existing rates and improving the tax-to-GDP ratio. “The goal is to include more people in the tax net,” it said, “The MQM will increase direct tax and decrease indirect tax.”

The party said that it will prioritise education, health, human resource development and information technology; support business startups to create zeal in youth; empower women to fuel the economy; and resolve the energy crisis with the right mix of hydel, solar and wind, “including a permanent solution of circular debt.”

“All taxable income must be taxed as per the Constitution,” it demanded. Furthermore, it maintained, all exemptions should be lifted, saying there is a dire need to impose an income tax on the income of feudal lords and big agriculturists.

Agriculture contributes 22% to GDP whereas it delivers only 1% in the National Tax Base, the MQM-P revealed, adding it bars small peasant and farmers. “Big farmers and landlords will be made to pay agri income tax,” it vowed.

On pension, the party said that it will look to make reforms in pensions to reduce pension costs incurred as the current annual pension expenditure is Rs1.5 trillion, which should be reduced to Rs375 billion by doing automatic indexation to inflation subject to a cap; instituting a minimum retirement age to receive benefits; and limiting dependents eligible for survivorship benefits.

“The MQM also proposes setting up a commission between the World Bank and the public & private organisations,” it read. Emphasising on expanding economic export productivity, it said that a recent report of the World Bank has “assessed Pakistan’s annual export potential at $88.1 billion.”

The document revealed that Pakistan imported $263 million worth of completely built units (CBUs) in the last 10 months. “We plan to raise duties on cars above 1300cc to curb the import bill,” MQM-P stated, adding “We shall increase duties on mobile phones priced over $500 at the import level.” 

The party says that Pakistan can outsource 600,000 IT professionals within the next three years which can generate over $2.5 billion annually, saying it will promote collaboration between technology companies and academic. “We will work with PayPal to initiate their services in Pakistan,” it said. 

In the shadow budget presented just days before the federal budget, the MQM-P has proposed that Rs10 to Rs20 billion should be allocated for establishing different sectoral cities like an IT city; an education city; a livestock city; a textile city; an automobile city; a media city in Karachi, saying these cities will largely be built by the private sector from the fields concerned.