The time has come
It is not as if the government was not warned – time and again. For one thing, there was something odd about Finance Minister Ishaq Dar returning from his IMF meetings in Dubai rather more content than the minutes would suggest. All that the government achieved – over and over again – was getting the Fund to approve repeated downward revisions of revenue targets. That means, in simple terms, that Dar sb’s ministry was unable to collect stipulated tax revenue even as this outgoing IMF program rolled on. And each time it promised to expand the base next time, and each time ended up begging for another downward revision.
Interestingly, every time the Fund would relent, Dar sb would sell it as a major step forward back home. For some reason, the finance minister equated his inability to gather desperately needed tax revenue, and IMF’s acceptance of the failure, as a commendable achievement for the national economy. But now the joyride is about to come to grinding halt. For one thing, the IMF program is about to expire next year. And considering its unimpressive performance, whether or not another will come remains doubtful. For a government long since reduced to borrowing to stay solvent, this presents yet another existential dilemma.
It could, of course, simply raise the Rs40b in unconventional taxes required by IMF and qualify for the new program. That would solve its balance of payments problems at least until the next election. But Dar sb must know by now that unconventional taxation, too, is easier said than done in the present environment. He is still struggling with his WHT smart idea. How, then, will he shove the Rs40b tax requirement down the middle class’s throat? True, the government promised expanding the tax net during the last general election campaign. However, it must have realised soon after its victory, if not long before it, that introducing necessary tax reforms would have required action against some of its own senior members. And now it has finally come to the point where it will have to make ordinary people pay for its own follies. As the next election draws near, this will have a pronounced political fallout that the government might not be able to survive.