This was the 5th budget of this regime and after 4 years of stabalisation which had devastating consequences, we expected a fundamental shift in government’s direction to move from stabalisation towards growth (never seen stabalisation stretched for 4 long years and now going into 5th).
Unfortunately this budget does not address how Pakistan can come out of a long period of :
low growth
high inflation
low investment
low savings
stagnant exports
Job creation
Poverty alleviation
High interest rates
Except for some very basic standard measures such as reducing taxes on salaried class, which had gone up from around 200 billion to more than Rs 600 billion in a period of few years, real estate sector and some relief in the super tax category for businesses with turnover of less than 50 crore, there is not much to show. In a way the government has only reversed the poor taxation decisions of the last few years.
FBR revenue forecast is Rs 15.3 trillion- almost 2 trillion more than this years collection. Major chunk of this will come from the already taxed sectors who will be forced to pay more taxes through what is known as enforcement. This is done primarily through intimidation, threats, business lockups and FBR notices. This will further drive away existing investors and discourage new investment. And let’s not forget the dreaded Petroleum levy. Already crushed, Pakistanis will be required to pay even more in the next fiscal going up from present 1.5 trillion to 1.7 trillion. All in the name of IMF. All of this means more inflation and more poverty.
A 4 % GDP growth forecast in its 5th year is reflective of the state of economy. With a population growth of 2.55%, a 4% growth cannot accommodate new entrants to the job market meaning more unemployment.
Regarding the much touted austerity, the numbers in the budget suggest that those at the helm of affairs are non serious about the plight of the people by further increasing the significant amount already spent on its perks, privileges and many benefits that are already impossible to justify. The total spending to run the federal government has gone up from Rs 971 billion to Rs 1021 billion.
If there was any further evidence of the elite capture, just a glance at the two decisions will more than confirm. The taxes on business and first class air tickets have been withdrawn while keeping the taxes for those travelling economy. Second the elite obviously spends a fair amount in foreign countries through credit cards. Those taxes are also withdrawn.