PARLIAMENT recently passed the annual budget after revising the proposed tightening by the International Monetary Fund (IMF). The economic managers have decreased the budgetary expenditure by Rs85bn and increased the taxes to Rs215bn to revive the stalled assistance programme.

However, the government has failed to achieve a progressive tax system in the country which is essential for equitable growth of all segments of society.

An increase in indirect taxes shows the lack of commitment to broaden the tax net. The government is following the dated and ineffective approach of increasing the petroleum levy from Rs50 to Rs60 which will result in more inflation as the petroleum prices have a direct impact on the prices of essential food items.

Similarly, the organised corporate sector and the hapless salaried class have been burdened yet again; this time beyond their capacity and even responsibility as they are already paying heavy taxes.

The government has to realise that it cannot solve the chronic economic problems of the country by continuing the same old policies. Had the policies been of any use, the country would not have landed in the situation that it finds itself in now. There is a need to bring the untaxed and undertaxed sectors in the net, such as agriculture, retail and real estate.

On the expenditure side, we need to cut discretionary spending, such as decreasing unsustainable subsidies to the power sector, reforming the state-owned enterprises, and finding a sustainable solution to the matter of pension of government employees that carry a sovereign guarantee.

Salman Ahmed Ansari
Tando Adam

Published in Dawn, August 2nd, 2023