Daily Times

Dr Hafeez Shaikh does not have to play it to the gallery for cheers or political gains. Yet, the prime minister’s adviser on finance and economic affairs has come up with an unbelievable revenue target even as the current fiscal year is going to end on a dismal note in terms of recovery. Raising the target by 35.4 per cent, Dr Shaikh is setting his eyes on Rs 5.5 trillion for the fiscal year 2019-2020 – Rs1.450 trillion more than the target for the current year. Hopefully, the economic wizard, installed a few weeks ago, has done his homework before the budget is laid before the parliament. The target may remain a distant dream if tax collection is not revamped and economic activity is not revitalized. The adviser and his team, which has many new faces after a flurry of sackings and transfers in finance-related departments just weeks ahead of the new budget, are banking on austerity, fiscal consolidation, and additional revenue mobilisation. Austerity is a popular slogan, with a ready appeal to the public but the government needs to adopt a culture of austerity in public departments and spending rather than flaunting it. The growing deficit, the slow growth rate, and high inflation make fiscal consolidation a real challenge while concessions in the form of amnesty schemes have made additional revenue generation hard.

The next few days are going to be important as the features of the new team’s economic policies unfold. It is being said that the government intends to generate more revenue by offering carrots to the current taxpayers and carrots to yet-to-be documented or yet-to-be in the tax net. Similar attempts in the past have drawn lacklustre results but the new Federal Board of Revenue Chairman Shabbar Zaidi says he is determined to make it happen. Dr Sheikh, on the other hand, plans to withdraw tax exemptions, recover arrears from defaulters and impose taxes on the services sector to generate more revenues. There are mixed reports on the PSDP size. Some suggest that the government might take the PSDP to a record high as it plans to hold local government elections in 2020.

While the government plans to withdraw tax exemptions, which will hit hard the salaried class, it will not be out of place to suggest rationalizing defence expenditure as well. Foreign investment, striking a balance in imports and exports and privatization or revival of sick units in public sector can also help set the economic wheel in motion. Firm actions are needed. *