"Then We revived you after your death, so that you may be appreciative." (Al-Baqarah: 56)
  • Friday 19, October 2018

There is Nothing New in PTI’s Mini Budget

There is Nothing New in PTI’s Mini Budget

The mini budget introduced in the national assembly by PTI finance minister Asad Umar is a big disappointment for all those who wanted to see new economic policies and measures. The mini budget contains all the ingredients of old Pakistan which PTI always opposed. Asad Umar proposed all the medicines to cure the economic ills of Pakistan that Ishaq Dar, Dr. Hafeez sheikh,  Saleem Mandiwala and Shaukat Aziz tested as finance ministers. This same medicine failed to cure the disease. This formula has already failed to fix the problems. 

For many years, PTI and its chief Imran Khan blamed both PML-N and PPP for adding burden on the poor masses. Imran Khan opposed every increase in the prices of electricity, gas and petrol for being unjustified and unfair. We were told for years that the PTI government will bring relief to the people instead of ruling elite. PTI leadership made tall claims of transforming the system and to make it fair for the ordinary people.

But once in power it seems that PTI has forgotten all those claims and pledges it made in the last period. In its first major economic policy decision, PTI decided to follow the economic policies it used to criticize. PTI government failed to make any difference from both PPP and PML-N governments. 

PTI government transferred the burden of economic crisis caused by the wrong policies of the ruling elite on to the masses. PTI government used the old policy of the Pakistani ruling class to increase the prices of Gas, electricity, petrol and impose more indirect taxes to mint money from the people. 

PTI came into power on the slogans of change and Naya Pakistan but pursuing the old economic policies and measures to raise money. It is strengthening the status quo on the name of change and Naya Pakistan.  PTI government imposes the same measures that it opposed when it was in opposition. PTI government is looking for new loans and aid from friendly countries to fill the financial gap.  

In a major policy reversal, the Pakistan Tehreek-e-Insaf (PTI) government has allowed tax dodgers to purchase cars and property and has also lowered the annual tax collection target to Rs4.4 trillion, deviating from its pre-election promise of increasing revenue collection and reducing reliance on indirect taxes.

Finance Minister Asad Umar unveiled the Finance Supplementary (Amendment) Bill 2018 in the National Assembly that carried the tax measures which had also been taken by his predecessor Ishaq Dar to enhance revenue collection. Umar also reversed the only major reform that the PML-N government had introduced to document the informal economy.

It allowed non-filers of income tax returns to purchase cars and immovable property. It also introduced a tax amnesty scheme for more than 800,000 people who in the past had been picked for audit due to their failure to file income tax returns. It also increased the withholding tax on banking transactions being carried out by non-filers of tax returns, which was the brainchild of Dar.

The measures unveiled by the new government suggest that the PTI had not done its homework and continued the policies of previous Pakistan Muslim League-Nawaz (PML-N) government.

The Rs 4.398-trillion target is only 14.4% higher than the collection of Rs3.841 trillion in the previous fiscal year. The PTI had promised to increase revenue collection to Rs8 trillion. Its target in the first year should have been at least 20% higher in order to achieve the Rs8-trillion objective in five years.

After allowing non-filers of tax returns to buy plots and cars, the undocumented economy will flourish. Cash will be withdrawn from the formal banking sector due to increase in the withholding tax on banking transactions.

It is very disappointing that the PTI government has lifted the ban on non-taxpayers to buy properties and vehicles ….today automakers have won and Pakistani taxpayers have lost,” tweeted former finance minister Dr Miftah Ismail.

Defending the move, the Federal Board of Revenue (FBR) said the PML-N government’s ban had dampened economic growth in these sectors. “The decision to lift the ban is a bonanza for real estate and automobile sector tycoons,” remarked Ashfaq Tola, former member of the Tax Reforms Commission (TRC).

The PML-N government had barred non-filers of tax returns from purchasing immovable property of the value exceeding Rs5 million. The non-filers were also stopped from purchasing new locally manufactured cars or first registration of imported vehicles.

The government also increased the sales tax on RLNG supply to all the sectors to the standard 17%. The reduced 12% sales tax will now be available only on supplies of RLNG/LNG to gas transmission and distribution companies. This will increase the cost of cement, fertiliser and CNG production.

On the recommendations of the Armed Forces Institute of Cardiology (AFIC), the government exempted 52 item categories of medical instruments and equipment from sales tax.
The imposition of indirect taxes, increased duties on selected import items and energy prices will give rise to inflation. The high inflation will affect the ordinary people directly and make their lives more difficult. When the government increases the prices of electricity, gas and petrol then production cost goes up and made it for local industries and manufacturers to compete in the international market. The transportation cost also increase and made the products more expensive. 

The people will pay more for the same products. This will not only increase the food budget of ordinary families but also increase their energy and transport bills. The already impoverished masses will further suffered under the price hike and high inflation. They already are struggling to feed their families and to meet the needs of their families. 

It is disappointing to see that PTI is repeating the old mistakes and anti-people measures of the previous governments. The PTI government has simply transferred the burden of the economic difficulties on to the masses to protect the interests of the ruling elite. It’s an old wine in a new bottle. Its old policies and measures introduced on the name of change. 

Khalid Bhatti ACE News