Compromised budget

Fragility in the coalition came to the surface as the PPP pushed the PML-N to the wall to drive maximum leverage from an untenable federal budget. The Finance Bill, however, was passed by the parliament after a hue and cry, exposing the inherent partisanship. The Rs17.57 trillion budget was approved after a give and take within the ruling dispensation, as the opposition, PTI, was somewhere lost in the woods.

The compromise arrived as the government gave in to most of the PPP demands — exemption on income tax on annual income of Rs1.2 million; an increase in BISP budget by 20%; reduction in solar tax by 50%; limiting FBR arrest powers to matters pertaining to sales tax forgery, and that too not at the inquiry stage; and treating tax fraud as a bailable offence. These concessions have almost made the revenue generation machinery toothless, and literally subservient to the executive.

The treasury, nonetheless, carried the day as amendments to various legislation, including the Income Tax Ordinance, 2001, and amendments to the Sales Tax Act, 1990, were approved. These amendments granted the Finance Committee powers to arrest traders involved in tax fraud exceeding Rs50 million, and not to the tax commissioner.

The budget proposals since inception were in doldrums as the government had projected a utopian growth rate of 4.2%. Likewise, the 'Restrictions on Economic Transactions By Ineligible Persons Lacking Sufficient Financial Resources Bill' hit snags as the proposal to raise new taxes to the tune of Rs432 billion, as recommended by the IMF, were obstructed by the ruling coterie, which in case of non-legislation would have incurred an additional Rs500 billion worth of new taxes.

The budget representing a 6.9% decrease from the previous year's estimates will certainly be in rough waters and a mini-budget seems indispensable.