The Panama Leaks have weakened the government’s budgetary position, as the focus has suddenly shifted from maintaining fiscal discipline to providing relief to the masses and avoiding new tax measures, an informed source said.
Panama Leaks, he said, have shattered the credibility of the incumbent government at the international level. The cash flow from the international financial institutions is likely to dry up in the near future. Pakistan will have to take immediate anti-corruption measures.
The government is already facing tough questions from the international community on the offshore properties, poor institutional response and non-existence of standard operating procedures against corruption.
“The only escape lies in holding the elections, the soon the better,” the source said.
The government has lowered the tax revenue collection target for the next fiscal year to Rs 3.600 trillion. It is important to mention that the tax revenue target had been set at Rs 3.700 trillion for the next fiscal under the three year budgetary framework prepared last fiscal year.
The tax target has intentionally been kept lower to avoid new tax measures. The government is already at odds with the business community due to its highly controversial indirect tax measures like imposition of withholding tax on cash withdrawals, an official source said.
Most of the tax measures will revolve around the documented corporate sector where tax estimates are easily achievable. The government is not likely to attempt further burdening the people outside the tax net, he added.
A set of relief measures for reduced duty on tractors, machinery and equipment imports, commodity procurement for exports through government agencies and enhanced allocation for research and development are likely to be announced for the agriculture sector.
Ministries of National Food Security and Commerce have been directed to give tax recommendations for the agriculture sector and their exports. Farming community is the major voting force in the country. To get a majority in the provincial and national assemblies farmers’ vote will be crucial.
The allocation for development spending on the energy and infrastructure projects will be increased. It enables the government to gain goodwill of the people especially in areas where the projects will be implemented.
