Ig­nor­ing rev­enue, debit side in bud­get

Pakistan Observer - - OPINION - —The au­thor is a for­mer deputy di­rec­tor gen­eral, Min­istry of Sci­ence & Tech­nol­ogy, Is­lam­abad. Dr Habib Gul Email:dhg737pk@ya­hoo.com

PAK­ISTAN’S rev­enue bud­get in spite of oil sav­ing on the back of cheaper oil im­ports and in­creased re­mit­tances from over­sees Pak­ista­nis, is in­ad­e­quate and can­not meet Gov­ern­ment ex­pen­di­ture for the fi­nan­cial year 2016-17. Hence, the Gov­ern­ment, like past, looked to­wards cap­i­tal bud­get, i.e., gifts, do­na­tion and par­tic­u­larly bor­row­ing. Bor­row­ing or loan is mostly re­ceived from in­ter­na­tional agen­cies, bonds, State Bank and com­mer­cial banks on their terms and con­di­tions. In Pak­istan, cap­i­tal bud­get is used for fill­ing up rev­enue-ex­pen­di­ture short­fall, fi­nanc­ing de­vel­op­ment projects and loan re­pay­ment.

Short fall­ing of the rev­enue bud­get can be imag­ined from the facts that dur­ing the com­ing year net rev­enue re­ceipts are es­ti­mated as Rs. 2,779,695 mil­lion against to­tal ex­pen­di­ture of Rs. 4,894,879 mil­lion. Pub­lic Sec­tor De­vel­op­ment Pro­gramme of the cur­rent fi­nan­cial year was also re­vised from Rs. 700,000 mil­lion to Rs. 661,297 mil­lion. The Fed­eral bud­get faces a se­ri­ous short fall in rev­enue as well as in cap­i­tal bud­get be­cause the loan giv­ing agen­cies are hes­i­tat­ing to in­vest in Pak­istan and their terms and con­di­tions for pro­vid­ing fresh loan is be­ing tighten with pas­sage of time. The Fi­nance Min­istry fo­cused on this point and ex­panded tax base but ig­nored cer­tain spa­ces in 2016-17 bud­get pro­pos­als.

In the Fed­eral bud­get 2016-17, The Fi­nance Min­is­ter ef­forts his best to sat­isfy par­lia­ment as well as es­tab­lish­ment, na­tion build­ing de­part­ments and fed­er­at­ing units by in­creas­ing al­lo­ca­tion. The es­tab­lish­ment and other se­cu­rity agen­cies de­mands have been in­creased which ne­ces­si­tated for in­creas­ing rev­enue. This is pos­si­ble through pru­dent tax as re­gres­sive tax­a­tion will neg­a­tively af­fect the econ­omy and po­lit­i­cal im­age of the Gov­ern­ment. How­ever, in­spite of hard work, two sec­tors which would not af­fect com­mon man pur­chas­ing power have been ig­nored. These sec­tors re­late to debt ser­vices and rev­enue bud­get.

The Gov­ern­ment will bor­row Rs. 452,915 mil­lion from the State Bank of Pak­istan and Com­mer­cial pri­vate banks dur­ing the year 201617. As Fi­nance Min­istry knows well, mil­lions of Pak­ista­nis do not take in­ter­est on their bank de­posits. Nev­er­the­less, the Gov­ern­ment pays in­ter­est on this loan. The Fi­nance Min­istry may ob­tain num­bers of such in­ter­est free ac­counts with ac­cu­rate de­posits from banks and re­deem in­ter­est on such loans. Banks are giv­ing no fa­cil­i­ties to the in­ter­est free ac­count hold­ers. Banks are earn­ing enor­mous profit from their clients. For ex­am­ple, the in­ter­est rate is 6 per­cent but they charge 15.50 per­cent from their in­di­vid­ual clients. The Gov­ern­ment re­pu­di­a­tion in­ter­est for this part of debit ser­vices will save tril­lions of Ru­pees and lessen bur­den on swelling loan.

Cel­lu­lar companies are highly taxed for us­ing their ser­vices but these companies trans­ferred all the levied taxes on com­mon man. These companies are earn­ing bil­lion of ru­pees through tax free ad­ver­tise­ment which needs tax­ing in the bud­get pro­pos­als. It will not only in­crease the Gov­ern­ment rev­enue but also free a com­mon man from un­de­sired ad­ver­tise­ment and fre­quent dis­tur­bance.

Pro­mo­tion of a cul­ture of hon­est dis­clos­ing of in­come and as­sets in Pak­istan is the­o­ret­i­cal and imag­i­nary for in­creas­ing the share of rev­enue bud­get. There is a per­ma­nent trust deficit be­tween tax pay­ers and tax col­lec­tors. In our coun­try, the fa­ther to son and hus­band to wife do not dis­close their real in­come how they will ac­cu­rately bring it to the tax col­lec­tors. In­stead of use­less pro­pos­als and rec­om­men­da­tions, it is sug­gested that the tax amount may be ra­tio­nal­ized and the law may be sim­pli­fied with strict ac­count­abil­ity other­wise tax eva­sion will be in­creased un­der pre­vail­ing so­cio-eco­nomic system.

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