Mini budget: A needed step to minimize fiscal deficit, streamline economy
PESHAWAR (APP): The tabling of finance supplementary bill 2023 in the parliament, which proposed Rs170 billion additional taxes mostly on luxury items, was being considered a viable solution and a bold step to take the country out of existing financial and economic challenges.
To address the inherited issues of fiscal, financial and circular debts, the present coalition government irrespective of political cost, has taken a bold decision by tabling the finance supplementary bill 2023 in the parliament by proposing additional taxes to the tune of Rs170 billion mostly on luxury items that would not affect poor people.
The government has also announced an increase of Rs40 billion in the budget of Benazir Income Support Program that would benefit hundreds of thousands of beneficiaries from Karachi to Khyber and Waziristan to Gawadar.
Professor Dr Muhammad Naeem of the Economics Department University of Swabi told APP on Thursday that the government was left with no viable option but to impose additional taxes mostly on luxury items, including cigarettes and air tickets to take the country out of the economic quagmire.
He said the new revenue measures would greatly help address issues of fiscal deficit, balance of payment and circular debt. Terming the new revenue and taxation measures of the federal government as the need of the hour, Dr Naeem said the mini budget would not directly affect the poor segments of society as most of the new taxes were being imposed on luxury items, which was not used by poor segments of the society.
“The proposal to impose a 20% or Rs 50,000 tax on one business or a first-class air ticket and a 10% advance tax on bills of marriage ceremonies would make no effect on the poor and underprivileged.
Ikhtair Wali Khan, PMLN KP spokesman and former member provincial assembly told APP that PTI government has taken huge foreign loans on high interest rate, and the coalition government was left with no choice but to negotiate with IMF to revive the suspended agreement signed by Imran Khan government on very tough terms and conditions.
“We have joined the coalition government to save Pakistan from an imminent economic default rather than to enjoy perks and privileges in the government. We have two choices whether to revive the country’s economy by taking tough financial decisions in the shape of a mini budget or allowing it to face a Sri Lanka like situation,” he said.
He said the Nawaz Sharif government had successfully completed an agreement with IMF in its last tenure by providing direct relief to masses while Imran Khan plunged the country into huge foreign debts and load shedding in its last four years despite IMF agreement.
“There was no match in terms of development and peoples’ welfare programs between the four years government of former prime ministers of Nawaz Sharif and Imran Khan as the latter has completely failed on all fronts,” he said.
He said an increase in the General Sales Tax rate has been proposed on the import of luxury items from the existing 17% to 25%, while the overall GST rate had been raised from 17% o 18%. To provide relief to poor people and the underprivileged, he said that a Rs40 billion increase in the budget of Benazir Income Support Programme (BISP) from Rs360 billion to Rs400 billion proposed that would help counter inflation, price hike and alleviate poverty in the country.
Ikhtarir Wali said the four years of government of Pakistan Tahrik e Inaf government in centre and 10 years in Khyber Pakthunkhwa have put the country on the brink of bankruptcy and financial default. He claimed that the PTI’s incompetent rulers had destroyed the economy and shattered confidence of the investors besides closed its owned raised Ehteash Commission to protect its loot and plunder.
Owing to poor economic and fiscal policies of former PTI government, he said that power sector was facing losses of around Rs 1,400 billion per year while the circular debt has swelled from Rs 1,148 billion in 2018 to Rs 2,467 billion now, forcing the government to impose additional taxes to reduce this huge circular debts.
Except BRT project completed at very high cost, he said that the former PTI government failed to launch any mega project for people welfare in the last 10 years. The billion trees project was taken over by the NAB while healthcare services in public sector hospitals were adversely affected in Khyber Pakthunkhwa, he said.
Wali said that not a single hospital in KP has been constructed and public sector universities were facing great difficulties to pay salaries to their staff, which exposed poor economic policies of PTI rulers.
On the other hand, he said the previous PMLN government has constructed state-of the art-Nawaz Sharif Kidney Hospital in Swat for poor patients of KP especially Malakand division. He said Hazara motorway constructed by the Nawaz Sharif Government provided quality communication services to people of KP besides promoting trade and tourism in KP.
Sumbal Riaz, a senior economist and financial expert said the new financial and taxation measures would help bring economic stability and improve economic and industrial growth As result of these positive measures, she said the income of masses would be increased and rupee value against dollar to be stabilized while fiscal and current account deficits will be significantly reduced.
With observance of strict financial discipline, she expressed the hope that the gross domestic product would grow by 4% in 2023-24 and resolution of Letters of Credit (LCs) would help give enormous boost to the country’s exports.
She said Pakistan’s economy was largely dependent on the agriculture sector and the Prime Minister’s historic Rs 2,000 billion Kissan Package, under which Rs 1,000 billion had already been released, would help bolster wheat, rice, sugarcane and other crops production besides bringing price stability in the open market.