The Express Tribune
Published Date: May 1, 2018
The sixth budget presented by the incumbent government was a populist one aimed squarely at the upcoming general elections but it also falls on to the opposition parties to present their shadow budgets which address issues such as the tax rate, poverty and enhance employment.
This was the crux of the analysis presented by economic experts at a special seminar titled “Post-Budget (2018-19) Overview and Analysis”, organised by Sustainable Development Policy Institute (SDPI), on Monday.
Former Awami National Party Senator and a former president of the Federation of Pakistan Chamber of Commerce and Industry (FPCCI) Ilyas Ahmed Bilour criticised the Pakistan Muslim League-Nawaz (PML-N) government for including an amnesty scheme in the finance bill, terming the decision as ‘wrong’.
He added that there should be a minimum 20 per cent tax rate for non-filers and tax evaders since the five per cent earmarked in the budget was far too low. He called for its amendment before the bill is passed.
“No one has taken their white money out of Pakistan but only their black money and they must be charged with a higher tax percentage,” he added.
Bilour was of the view that the budget will hurt the poor.
Former chief economist of Pakistan Dr Pervaiz Tahir said that the biggest challenge for the next government would be to first sustain and then build upon the growth rate of 5.78 per cent amid massive fiscal and current account deficits.
“In my assessment, this time Pakistan may not go to the International Monetary Fund (IMF) to meet its development expenditures since the government hopes to collect maximum revenues from the amnesty schemes,” he opined. But it will also be very difficult for any incoming government to roll back the populist measures proposed in the budget, he suggested.
While criticising the performance of the Federal Board of Revenue (FBR), Dr Tahir said that the institution collects far less revenue than its own expenditures.
“What is the point in having such a loss-making organisation,” he asked, adding that FBR should seek to increase the number of tax filers, not revenues.
Earlier, SDPI Executive Director Dr Abid Qayuim Suleri said that the incumbent government has presented a deficit budget with increased expenses when compared to the last year.
After appeasing three non-discretionary expenditures such as debt servicing, defence and day-to-day government expenditures, the government, he said, may be left with few revenues and far more development expenditures which would further widen the fiscal deficit.
At that point, Suleri said, the government may have no other choice but to go to a foreign financial lender such as the IMF. He called for rebasing the national GDP growth since it missed upcoming technological sector products such as Uber, Careem, Zameen.com, Daraz.pk and other such services.
SDPI Joint Executive Director Dr Vaqar Ahmed, while commenting on the revenue side of the budget 2018-19, said that it was a good sign that Pakistan’s economy has seen growth on the back of the China Pakistan Economic Corridor (CPEC).
The past two quarters have also seen an uptick in exports, he said, adding that distortions in the tax regime can be addressed through the budget.
“There is a need for reducing the number of withholding taxes which, in essence, act as regressive indirect taxes and the corporate tax regime need to be simplified.