Abbasi warns of economic doom

Former prime minister Shahid Khaqan Abbasi has warned the government to revisit the newly approved budget or risk pushing the economy to the brink.

At a news conference, Abbasi cautioned that implementing the fiscal year 2024-25 budget would deter foreign direct investment and force salaried and young people to leave Pakistan.

Questioning the government’s wisdom to grant income tax exemptions on property sales to retired and serving civilian bureaucrats and military personnel, Abbasi declared the fiscal year 2024-25 budget “the worst in Pakistan’s history”.

Shahid Khaqan Abbasi was addressing a press conference five days before the formal launching of his new party – Awam Pakistan. Former finance minister Miftah Ismail also spoke at the occasion. “Either the economy will survive or the new budget, if the government tries to implement it,” said the former PM. The former PM also raised questions about fiscal governance, pointing out discrepancies in tax collections from sectors like tobacco manufacturing and losses due to smuggling of diesel and Liquefied Petroleum Gas (LPG).

Instead of imposing heavy taxes, the government should abolish Rs500 billion allocations for MPs, start collecting due taxes on diesel and LPG, bring smuggled cigarettes into the tax net, broaden the tax base and end the unjustified tax exemptions for the merged Federally Administered Tribal Areas.

He criticized the lack of measures to combat diesel smuggling and the absence of economic benefits reaching the people of the Federally Administered Tribal Areas (FATA), despite their integral status within Pakistan. He said that the government has put a further tax burden on the salaried class and lamented that even basic items like milk have been taxed.

Speaking on the occasion, former finance minister Miftah Ismail also criticized the government and blamed the government rather than the International Monetary Fund (IMF) for backbreaking taxation measures.

He pointed out that instead of following the IMF’s recommendations of taxing untaxed sectors; the government has put more burden on the salaried class.

The IMF has not asked Pakistan to give Rs500 billion to the MPs and it also did not ask to increase the non-interest payment budget by 24%, said Miftah Ismail, former finance minister.

He went on to say that the IMF did not ask Pakistan to impose a 10% surcharge on payment of 35% income tax.

On the first day of the budget, the milk production companies increased the per litre milk price by Rs75 per litre and the cement factories raised the cement prices by Rs125 per bag to pass on the impact of new taxes to the consumers.

Abbasi said that the federal and four provincial governments have announced cumulative Rs30 trillion expenditure and there was no big deal to save 10% out of it or Rs3 trillion. The Rs3 trillion savings would have ended the need to impose over Rs1.5 trillion in additional taxes, said Khaqan Abbasi.