Weekly Profit Pakistan Today
Published Date: Apr 30, 2018
This year the budget 2018-19 is non-conventional as compared to the last four year’s budgets, where the government presented a popular budget with an eye on the upcoming general elections. There is a need to understand the budget in totality and need to have informed criticism and praise of the budget. Whereas, the opposition political parties have to present their shadow budget that should give the formula to reduce the tax rate, reduce poverty, and enhance employment opportunities.
This was the crux of the analysis by the experts at a special seminar titled “Post Budget (2018-19) Overview and Analysis” organised by Sustainable development Policy Institute (SDPI), here on Monday.
Speaking on the occasion Ex-Senator, ANP and Former President FPCCI, Ilyas Ahmed Bilour said that making the amnesty scheme as part of the finance bill was a wrong decision of the incumbent government. He said there should be a minimum 20 per cent tax rate for non-filers and tax evaders, as 5 per cent tax return is very low and should not be passed. No one has taken their white money out of Pakistan but the black money and they must be charged with a high tax percentage. He further said that this budget is going to increase the prices in the market and will hurt poor the most.
Later, Former Chief Economist Pakistan Dr Pervaiz Tahir said that the big challenge for the next government is to sustain and build upon the growth rate of 5.78 per cent amid huge fiscal and current account deficits. “In my assessment this time, Pakistan may not go to the IMF to meet its development expenditures, as the government hoped to collect maximum revenues from the amnesty schemes”, he said. To roll back the populism factor from the budget would be very difficult for the next government, he added.
While criticizing the Federal Board Revenue’s (FBR’s) performance, Dr Pervaiz said that the institution is beyond repair where it collects less revenue than its own expenditures. “What’s the point in having such loss-making organisation”, he lamented. He said the FBR is not the federal but national agency and its targets should increase the number of tax filers, not revenues.
Speaking earlier SDPI Executive Director Dr Abid Qayuim Suleri, while covering the expenditure side of the budget said the incumbent government has presented a deficit budget with increased expenses as compare to last year. He said after spending on three non-discretionary expenditures mainly debt, defense, and day to day government’s expenditures, the government may left with least revenues and more development expenditures, which would further widen the fiscal deficit. The government may be left with no choice but to go for IMF program if it failed to manage resources to finance the development expenditures till June this year, he added. Dr Abid said our GDP growth rate was not correctly captured and we need to rebase our GDP growth, where Uber, Careem, Zameen.com, Daraz.pk and other dozen of services were not captured in the GDP formula.
SDPI Joint Executive Director, Dr Vaqar Ahmed while commenting on revenue side of the budget 2018-19 said it is good sign that Pakistan’s economy has seen growth on the back of CPEC. The past two quarters have also seen an uptick in exports. He said distortions in the tax regime can be addressed through budget 2018-19. There is a need for reducing number of withholding taxes which in essence act as regressive indirect taxes and the corporate tax regime need to be simplified. This would require removing distortions created by alternate corporate tax, minimum turnover tax, super tax and advance tax, he added.
“The distortions created by customs duty laws can be corrected by merging all duties including para tariffs, additional customs duties and regulatory duties”, said Dr Vaqar, adding that the effective indirect taxes faced by agriculture are still higher in comparison to peer economies. He said the fiscal policy should be formulated in a manner so that Pakistan grow without accumulating more debt, economic growth translates into exports competitiveness and growth is led by investment and not consumption expenditures.