Of budgets and mango men

The challenge of presenting a budget that is well received in this country with its broken fiscal back and empty coffers is an ask for any government. For a newly elected one it may have proven to be a question they couldn’t answer correctly at this moment in time.

Why do I say that? Well let us examine some of the salient features of this budget, which are most likely to affect common people instead of throwing out numbers upon numbers and not understanding anything.

 

  • Sales tax rise from 16 to 17% – Sales tax is levied upon everything you trade in the economy (although there is still a huge black market in Pakistan) generally increasing sales tax means that the goods everyone buys will get more expensive. Why is that? Its because no one will bear the extra one percent increased by the government. Importers will add it into their price and so it will get passed on. For those commodities that are not imported and are bought and sold locally (as all things are before they get to retail) it means the same thing. Does the government earn the extra one percent though that it badly needs in this time of empty coffers? Well that is debatable and another long post. Actually in the fag end of things the government wont really benefit from the extra 1% because there is so much sales tax theft and what is left is handed back to our dear exporters in one lieu or another that the government has to date to my knowledge lost money on many sales tax amendments they have made. Actually in all honesty the best way to collect tax on anything is at point of entry either in the system from abroad through customs or into a province at the border of it, other than the prevailing system doesn’t guarantee any revenue. So why burden the public any further? Beats me!

 

  • HEC is to give incentives from 15 billion Rs to as our new finance minister has said roughly 54 billion Rs when all is said and done. So the correct figure will be somewhere in the middle, how that will be calculated off course we don’t know. The point to think of here is that out of all this money a lot will be given to buy new laptops for college students under the PMS laptop scheme. Which sis very commendable and good to look at on paper but the fact remains that Pakistanis need an overhaul in the education system at grass roots provincial level. So instead of buying a college kid a laptop, think of how many youngsters a laptop could send to school? Think subsidized or free tuition in schools equipped with a proper standard of teaching even at a basic level. That will ensure that after about a decade we can get a crop of Pakistanis with correct historical sense, properly equipped to then go to college and shine.

 

  • Austerity drives and Ramzan packages : Austerity is a great thing for a new government to announce, it’s a rah rah factor. However to cut back on what is already exorbitant beyond all normal means still leaves a sort of bad taste in ones mouth.  The pm house budget if cut by 40 or 45% would mean it spends 1 million Rs a day rather than !.9 million. Doesn’t explain why the prime ministers house spends 1 million Rs daily in a country where 60.3% of us live on less than 200 Rs a day does it? Also the problem with Ramzan packages and we have had them every ramzan is that until there is a system of price control which is actually implemented by spot checks and heavy fines on the spot by government officials hoarding will have a hey day and continue unabated!

 

  • Overall taxbase increase (bringing taxpayers in the net): Consider this, Agriculture is 21% of the GDP but contributes 1% tax to the kitty. Industry is 21% of the GDP & contributes 52% in taxes. So how does taxing the already taxed more help us? It does not. So when are we going to tax the sectors equally? When the feudal backing of popular governments comes to an end which is going to be a far far time perhaps in our future. Certainly not a wise approach by any government as sooner or later this amount of disproportionate taxing makes people want to “not pay taxes” and that is what’s been happening to Pakistan.

 

  • Electricity & its woes : Huge stock piles of money laid aside for this and should be, whether they will be used to give the awam any respite though is a fair question as even now punjab and its outlying areas are suffering from back breaking load shedding.  Can the plants be put up fast enough? Will this money earmarked be actually used to do something?? Should we buy electricity from India? As you can see earmarking funds is one thing but there are a lot of very very tough decisions to be taken in this sector and I do not think this government frankly has the gumption to take them, I can hope though that they at least use the money earmarked to save our future from darkness.

 

We should also keep in mind as the common or more humorously referred to as mango people online that budgets are just the start of something. True natures are revealed a bit more down the road to implementation. The fact of the matter is that a lot of work has to be done financially to get us anywhere near the 4.4% GDP that the government has set as its goal. We must all partake in this together but in order to do that we need more then empty promises and messianic speeches, we need leadership. So here is to the hope that the current government can provide one where it matters.

 

 

 

 

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1 comments
chipkale
chipkale

Another fucked up Ramadhan is what I see.