Ignoring revenue, debit side in budget
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.