No Clear Direction
In announcing Pakistan’s much-trumpeted fifth federal budget, has the government of Prime Minister Yousuf Raza Gilani moved forward or backwards is a question that many people are asking. In normal circumstances, the budget of a democratic government in its concluding year in power should have been one of triumphs and successes, of thresholds crossed and targets achieved. In the context of Pakistan’s budget for 2012-13, however, there are more apologies than achievements. It is a budget encompassing diverse directions in attainment or otherwise of goals and targets in the areas of energy, social services, security and overall growth. Many have described the budget as largely a rudderless document. The government seems to have underestimated expenditures and overestimated revenues, perhaps oblivious of the fact that all this numbers-flaunting would need to undergo a painful revision when reality sets in.
The country’s economy has been besieged for the past few years by the power crisis though, as claimed by the Finance Minister, subsidies worth Rs. 1,250 billion have been provided to the power sector over the last five years. The government is said to be undertaking reforms to set the system right, but these are painful reforms and cannot be implemented overnight. Furthermore, for a problem that made its appearance in the middle of the last decade, it is unfortunate that no meaningful planning has been undertaken so far and no concrete steps implemented to catch the bull by its horns. It is not clear what the government’s way forward is on this. All that there has been in evidence is a lot of fuzziness while people have been literally kept in the dark.
There is obviously a lot of political expediency riding the taxation proposals in the new budget announced by the Pakistan government, wherein tax rates have been lowered for some and raised for others. The government proposes to raise additional taxes worth Rs.63 billion, including sales tax and federal excise duty of Rs.29 billion though it does realize that this will fuel inflation, much to the detriment of the poor. The business class has been spared new taxation and has also been extended a relief of Rs.2 billion in customs duties on a wide range of items. A lucrative package has also been introduced for investors in the share market through whitening of black money. And despite the fact that new tax measures worth Rs.34 billion form a part of the budget, these are sought to be raised from sectors where the tax machinery is likely to face a tough time collecting revenues. Voters are certainly being wooed in this election year, especially the salaried class and pensioners, and have been given a relief of Rs.24.5 billion in income tax and Rs.5.5 billion in sales tax.
Budgets come and go but it is again evident that the government in power in Pakistan does not seem to be intent on tackling deep-set economic problems. From power sector reforms to raising the tax-to-GDP ratio, there seems to be a lack of application at the government end to find workable solutions. The saga of mismanagement and misgovernance continues while the pressure on the economy increases.