Wel­fare bud­get

The Pak Banker - - FRONT PAGE -

Be­fore the re­cent gen­eral elec­tions in Pak­istan, all ma­jor po­lit­i­cal par­ties, in­clud­ing the PTI, PPP and PML- N promised to max­i­mize wel­fare for the peo­ple. PTIs man­i­festo talked of in­clu­sive eco­nomic growth and so­cial ser­vices by link­ing them to gov­er­nance. Sim­i­larly, PPP fo­cused on com­po­nents of so­cial ser­vices and re­build­ing the econ­omy so it could work for all sec­tors of so­ci­ety, and PML- N tried to come up with sus­tain­able eco­nomic growth while build­ing on the eco­nomic model more in­clined to­wards in­fras­truc­ture de­vel­op­ment. When the PTI came into power, the 100 days' agenda to set long term goals was put on the ta­ble. One of the key ac­tion of these 100 days was to re­visit the ex­ist­ing fi­nance bill and amend it ac­cord­ingly by set­ting tar­gets till the end of fis­cal year 2018- 19.

The amended fi­nance bill which was pre­sented in the assem­bly was a road- map to clear many un­cer­tain­ties but it didn't work out for the gov­ern­ment as was ex­pected. There were some pos­i­tive de­vel­op­ments with re­sults more linked to long- run poli­cies. In some cases how­ever, the pol­icy frame­work given ad­versely af­fected peo­ple be­long­ing to the mid­dle in­come group. In this amended fi­nance bill, the gov­ern­ment came up with some pos­i­tive de­vel­op­ments, such as health ini­tia­tives in­clud­ing ini­ti­a­tion of card schemes which was first tested in the Khy­ber Pakhtunkhwa gov­ern­ment. Sim­i­larly, on build­ing new houses for the mid­dle in­come group, a sig­nif­i­cant amount is al­lo­cated in or­der to meet up the tar­get de­fined in man­i­festo and also to pro­vide easy shel­ter.

An­other move which may sig­nif­i­cantly im­prove the rev­enue side is the tax by parliamentarians to be paid for ac­com­mo­da­tions and ben­e­fits. These things, along with some other mi­nor ac­tions will sig­nify the wel­fare con­cept and other ac­tions may be able to bear fruit in the long run. These steps may sig­nify the long run im­pact. In the short run, there is pres­sure on the peo­ple of min­i­mum in­come groups with in­crease in prices such as that of gas and no sig­nif­i­cant change in tax struc­ture. Fur­ther mea­sures in­tro­duced in­clude in­crease in the tax rates for those earn­ing above Rs 2,400 thou­sand an­nu­ally. This will cause the amount of dis­pos­able in­come in this coun­try to drop fur­ther.

Fur­ther­more, look­ing at the prices in amended fi­nance bill re­veals gas prices could rise sig­nif­i­cantly. The claim in this re­gard made by the gov­ern­ment is that pres­sure will be mostly on com­mer­cial users, where the price has been in­creased by up to 143 per­cent. But look­ing at the big­ger pic­ture, it is con­sumers buy­ing com­mon food­stuffs who will be the most se­verely hit. The con­se­quence of this in­crease in gas price can also lead to fur­ther in­fla­tion. Other im­pact it­self comes in the form of fur­ther de­crease in the in­come for do­mes­tic con­sumer with the change in price from min­i­mum 10 per­cent to max­i­mum 143 per­cent.

These steps and mea­sures taken by the gov­ern­ment have re­sulted in pres­sure on wel­fare side of the tax payer in gen­eral with se­vere pres­sure on lower and up­per mid­dle in­come groups. Fur­ther losses of dis­pos­able in­come may re­sult in poverty in­ci­dence for those peo­ple earn­ing be­low min­i­mum wageTo carry on with busi­ness and run­ning state af­fairs, the gov­ern­ment needs to re­visit the bill and take out those points where those pay­ing taxes should not be made tar­gets and be made to com­pen­sate for the losses caused by non- tax pay­ers and other non­pay­ments. As promised in its man­i­festo strict ac­count­abil­ity should be en­sured for those be­com­ing rea­son of losses in these pub­lic en­ter­prises. This amended fi­nance bill should bring in a mech­a­nism to re­cover from non- tax pay­ers and non- pay­ers of util­ity bills. These will not only help those who are pay­ing taxes in the long run to sus­tain but will also re­sult in wel­fare gain achieved through the bud­get.

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