The unkindest cut. Our development budget has been cut by Rs 100 bn for Financial Year, 2011 in order to make ends meet. There were definitely other suitable candidates, like the defence budget for instance. But that is probably beyond the scope of any political government. The government did what it had to do; the budget deficit does not care whether a government bridges it by siphoning money from education or from the toys-for-the-boys. Phasing out subsidies, for which the government dishes out a gargantuan Rs 256 billion, is also going to be a problem, with a populist backlash as prickly to deal with as the denizens of the garrison city near the capital.
It is not very difficult to understand the exasperation of the finance minister. Speaking at a function in Karachi, he claimed interest groups had bribed politicians to oppose the RGST. Though one could disagree with this assertion by attributing opposition to the RGST to regular, garden-variety cheap populism, there really is something to be said for Mr Hafeez Sheikhs assertion. Considering that the country already has a GST regime, opposition to the reformed version of the tax doesnt really make any sense. The reformed tax, which shifts the tax burden away from the retail end towards a bit at all stages of value addition, automatically creates a bigger database for the Inland Revenue Service. This makes it difficult for businesses to cheat on their income tax.
Opposition to the RGST is usually made by invoking the interest of the common man where in reality it is only the fat cats that need to be scared. It is a sad comment on the lazy and compliant nature of our mass media that instead of calling out the irresponsible stance of various political players on this issue, it is actually egging them on.
