Budget Is Presented

Author: Dr Qaisar Rashid

Finally, the much-awaited budget has been presented in the National Assembly – immediately after Pakistan’s high-powered delegation concludes its visit to China.

The ongoing month of June will be remembered to dictate Pakistan’s two preconditions. First, Pakistan has to present a budget for the financial year 2024-25 as per the directions of the International Monetary Fund (IMF) to secure the next Extended Fund Facility amounting to $6 billion. Second, Pakistan has to ensure the foolproof security of the Chinese citizens (especially engineers) on its land to secure China’s financial help such as investing in Pakistan and deferring the service of loans. Of these two, on June 12, Pakistan delivered on the first precondition. However, Pakistan has yet to deliver on the second one by grappling with the Tehreke Taliban Pakistan (TTP) functional in the northwest and the Baloch insurgents active in the southwest of its land.

The first precondition has brought Pakistan to the pass of doing what it procrastinated to do: taxing the undertaxed and untaxed sectors of the economy such as the real estate sector and non-salaried class. The growth in the real estate sector has devastated Pakistan financially. Other than buying foreign currency, this sector remained the mainstay of parking money (whether earned from legal or illegal sources). The black economy thrived at the expense of unregulated real estate. Even local industrialists were found abandoning their work and investing in this sector to earn confirmed profits. The entrepreneur’s intellect was reduced to ruminating about where to buy a plot and when to sell it. That is it. Such a phenomenon blunted mental faculties to launching business initiatives and running small industries, which could be export-oriented. Neither mind nor money was left available to contribute to the economy innovatively. Even the youth who passed out from renowned universities could be found engaged in this easy-money-minting process. An extension of this trend can be found in the Dubai leaks. Further, with the closure or absence of local industry, the citizens started relying on foreign goods, thereby increasing the import bill. By introducing a tax regime comprising both direct tax (Capital Gain Tax) and indirect tax (Federal Excise Duty), the budget has tried to correct this anomaly by regularizing the real estate sector.

Pakistan has to satisfy China on the security of the Chinese personnel and the money they have invested in Pakistan.

Similarly, the non-salaried class such as doctors and lawyers had made Pakistan an earning heaven by working in the private sector without being a significant part of any direct tax-paying regime. Their offices functioned as factories working day and night earning money in the name of private practice. They should earn money commensurate with their knowledge and skill but they should pay direct taxes to contribute to the economy of the country which is sustaining them. They sought benefits from the educational and training institutes of the country but afterwards, they chose to stand aside by prevaricating their responsibilities for returning the favour to the country in economic (tax) terms. The budget has tried to rectify this incongruity as well.

Generally speaking, through the introduced budgetary manoeuvers, Pakistan has finally set foot on the path of economic self-reliance. That is, tax the citizens to meet the country’s expenditures, instead of meeting the cost of running the country from borrowed money. The world’s donors have refused to offer any free lunch. Pakistan has to stand on its own feet. Taxing the citizens will do another favour: it will cultivate a responsible citizenry. When a country relies on its citizens for economic sustenance, the country works for its benefactors, the citizens. Presently, the courts are brimming with complaints lodged by several citizens against the highhandedness of the state functionaries of all hues. Taxing the citizens to sustain the government’s functioning is bound to end the citizen-state estrangement. The state functionaries would work for the welfare of the citizens and not to exasperate them. The budget has done a great favour to the citizens by empowering them to decide on the country’s destiny. The present budget is just a beginning in this direction.

The budget has proclaimed one thing clearly: the economy will be documented at all costs. There is no space for the non-tax filer category. All corners generating income have to be regularized (documented), by making them fall under a system of rules and regulations. Progressive taxation is the solution. Further, the budget has delivered on both accounts: broadening the tax base by introducing more taxes, and broadening the tax net by including new taxpayers. With that, the budget has heralded the end of the phase of Pakistan’s reliance on the blood-stained foreign money funnelled during an international conflict engulfing any neighbourhood. The money soaked in blood accrued little benefits to Pakistan. Some of it landed in bank accounts of certain Pakistani officials opened overseas. Some of it entered Pakistan to create islands of luxury, thereby disrupting the tenor of living. An all-have class got birth alluring others to follow suit. The budget is an effort to achieve the goal of economic self-sufficiency.

Now, Pakistan has to sanctify the budget by getting it converted into a finance bill to secure the IMF’s loan. Though the budget presenter hinted at the privatization of certain national corporations and the devolution of certain ministries to the provinces, the presenter did not speak on the measures to be taken to curb smuggling, including non-custom paid vehicles. Pakistan has to make its borders unerring to protect the local industry, otherwise, the menace of smuggling will ruin the economy. Nevertheless, the next major challenge would be how to convince the politically divided and disaffected citizens to get documented and pay taxes.

The second precondition is yet to be materialized. Pakistan has to satisfy China on the security of the Chinese personnel and the money they have invested in Pakistan. This is a task as daunting as to implement the announced budget. Dealing with the TTP will be more difficult than dealing with the Baloch insurgents.

The writer is a former diplomat and freelance columnist.

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