A new budget after only 1 Month
Analysis by Prof Dr Abdul Jabbar Khan
With an ever rising inflation, cost of capital through higher interest rates slabs in finance and banking, and upward moving cost of living would play havoc following yet another ‘tax missile’ thrown on public yesterday.
As the federal budget has just not completed one month since its tabled and approved by the National Assembly, the government of PTI led by Imran Khan has still introduced another “mini but larger in scope” new budge through Federal Board of Revenue taxation measures.
A minimum of 3 per cent Valuation Added Tax combined with adjustment in general sales tax, federal excise duty, and reducing government powers for granting exemptions etc are the salient features of the new measures. It was not expected as the World Bank has bitterly criticised the Pakistan’s new budget saying that it has lost its credibility. The reasons were quite well exposed. The financial and economic team has not been there in place with combined efforts. There are seemingly confusions, absence of an indigenous model and more so power struggle.
A recent World Bank report says in 2012, the country had secured five A grades – the highest score – but in the 2019 assessment there was not even a single indicator where it got A. Pakistan lost the highest score on critical indicators like classification of budget, comprehensiveness of budget information, transparency in inter-governmental fiscal operations, participation in budget process and predictability of direct budget support.
The non-productive projects, as mentioned by an overseas Pakistani economist tended to be usless and wasteful for Pakistan, however the present government needs a real overhaul, reassessment and re-evaluation of major projects of infrastructure and try to get a reduced subsidy in transport and should not just add depreciation cost like one in Lahore orange line. Given the scenario where the unemployment and rising non-development expenditure, the real output has been of negative value and the civil bureaucracy at centre and the provinces are adding cost to national exchequer. This is where the PTI government needed to indulge in rather imposing heavily tended taxes in the form of gst, vat and federal excise.
The businesses have started closing gradually. Karachi could be surveyed and investigated where small units have asked their employees to go home from the end of current month. Faisalabad and many other industrial and business centres are having no exceptions in this regard.
The FBR circular no. 01 2019 has become a threat to the business and low income groups, a well acquainted and familiar to FBR practices businessman said while talking added that FBR officials have very decently and swiftly turned the cannons to the people and business sector.
The cost of doing business and the environment have become not acceptable to them. Previously it was a custom general order (CGO) and Statutory Regulatory Order (SRO) regime and now the general sales tax order regime has been initiated by the Shabbar led FBR. The Inland Revenue Policy Wing never asked the officials of CBR/FBR about their concealed wealth and assets, asked a leading businessman asking for anonymity, fearing the action by CBR officials in different departments.