- Squeezing the salaried as before
While PM’s Finance Adviser Dr Abdul Hafeez Sheikh could not make the annual budget speech because he is not a member of either House, he spoke at length at Wednesday’s traditional post-Budget press conference, untrammelled by parliamentary restrictions, and re-emphasised the message in the Budget speech itself. That was buttressed by the presence at the press conference of both his Minister of State for Revenue, Hammad Azhar, who had actually made the Budget speech on Tuesday, and by the CBR Chairman, Shabbar Zaidi, imported from the private sector: pay taxes or face the consequences.
While no one should object to any increase in the tax net, the origin of this effort is not so much to increase revenue, as to fulfil the demands of the International Monetary Fund, with whom the government has made an agreement, one which the IMF Board will approve once Pakistan wins FATF approval. The emphasis this Budget seems to be on bringing back into the tax net those who had got out of it, or had never been in it in the first place. That means, as the PM’s Finance Adviser stressed, that the distinction between filers and non-filers has been abolished in the hope that ultimately there would be no non-filers left. However, approach to the agreement seems to be bureaucratic: abolition of exemptions. At the same time, the biggest exemption of all, that to agricultural income, has not been touched. The emphasis is once again on taxing the already taxed, the salaried close, who have seen an unfavourable revision of tax slabs. As the decrease in their rates was because of an acknowledgement that inflation had driven salaries higher in nominal terms without any real increase in incomes, the budget will be an attempt to extract more from those who are already paying too much.
Dr Sheikh pledged to make the rich pay taxes. This may not be possible without ever more blatant coercion. If this was being done because the money thus raised would go on public welfare, it would be painful, but tolerable, but it is to go, as with the present Budget, on debt-servicing. PTI supporters would be justified in wondering where all the promises of doing things differently had gone. What is particularly disappointing is the poverty of thinking shown.