Daily Times

ISLAMABAD: The Pakistan Muslim League-N (PML-N) government has refrained itself from presenting a popular budget despite the fact that the election year was approaching and hence, a ‘spending spree’ or people friendly budget could have been expected on the part of the government.

This avoidance from taking popular measures was somehow a reflection of the confidence of the government to get re-elected by next year’s general elections. He said that the widening current fiscal deficit and growing trade deficit should be the areas of prime concern for the government.

Executive Director Sustainable Development Policy Institute (SDPI) Dr Abid Qaiyum Suleri expressed these views while presenting his detailed analysis on the federal budget during the post budget seminar ‘Post Budget (2017-18) Overview-Some Reality Checks’, held by Sustainable Development Policy Institute (SDPI) here on Monday.

He said that it was a good sign for the democracy and continuity of the policies that in the 70 years history of Pakistan, 5th consecutive Federal Budget has been presented by a government being led by one prime minister.

However, he said, a careful analysis of the federal-budget 2017-18 suggested a scenario where it was depicting stability but lacking sustainability in terms of economic viability. He said that to link GDP growth with grass root social development, provincial economic surveys were also required.

He said that the allocations against PSDP have been significantly increased but mainly it was depending on borrowed money or grants. SDPI Deputy Executive Director Dr Vaqar Ahmad, while highlighting various aspects of the Federal-Budget 2017-18, opined that a rational budget formulation process should be aim to reduce the inequalities through different instruments.

He said that this objective could be achieved through phasing out federal excise duty, simplification of general sales tax (GST) regime and reduction in GST rates as well as lowering of customs duties faced on inputs and finished goods used by the poor. Unfortunately, he said that the federal budget that has announced missed these critical measures.

He added further that the recent literature on tax incidence also suggested that reducing indirect tax has a pro-poor impact if relief was provided in consumption of food, fuel, cooking oil, bread, milk, fruits, tea, sugar, and vegetables. Unfortunately, the plethora of indirect taxes and withholding taxes was continued to accentuate income and consumption inequalities. This year again, over 60 percent of revenues of Federal Board of Revenue are envisaged to arrive from indirect taxes, he said.

Dr Vaqar said that it was also a matter of concern that the growing number of indirect tax exemptions were being allowed to select sectors and entities. Since the past year, he added that these exemptions have grown by 5.4 percent. The budget documents or the previous year’s economic survey did not provide any tax incidence or welfare analysis of such exemptions, which could inform us regarding gainers and losers from the forgone revenue, he concluded.

SDPI Senior Research Fellow Dr Sajid Amin also brought various aspects of the Federal Budget 2017-18 into discussion and said that the improvement in macroeconomic indicators was hard to explain based on the fundamentals of economy as exports, national savings and debts recorded deterioration in outgoing fiscal year 2016-17. He said that the Budget 2017-18 did not offer much for solutions to the structural problems of the economy as well.