The current expenditure of the federal government is far in excess of the revenue collected by the Central Board of Revenue (CBR), even if the interest payments are excluded from the expenditure, as shown in the table, thus creating a wide gap between the revenue collection and the expenses.
The interest payments, it appears, have become an integral part of the current expenditure on account of debts, which proves that we are still living beyond our means.
The government can either go on spending on hopes of getting assistance regularly to balance the budgets, or else it can make people aware of the situation and urge them to tighten their belts and live within the available means. This can pose a serious problem, as the public is not used to living in difficult conditions, particularly the affluent class. The society is getting unbalanced day-by-day giving rise to class disparity. Though, the rich and the poor still exist, but the one-time vibrant middle class is fast disappearing as the government’s economic policies are making rich, richer and the majority, poorer.
The time has come to give some sacrifice. The class which is already paying taxes will pay more if such a situation arises. But the CBR staff, with few exceptions, are in the habit of striking bargains with payers for reduction in tax liabilities. National interest is sacrificed at the altar of self-interest. Apathy on the part of taxpayers is also attributed to the low level of services provided by the government in return of tax money it receives. So far, coercive methods used by the government to improve tax collections do not appear to have yielded the desired results. This will be apparent from the fact that despite a survey conducted by the CBR with the help of the Armed Forces some time ago, the number of tax paying companies has declined instead of increasing, as can be seen from the following figures:-
Companies paying taxes Numbers
Year 1999-2000 24,147
Year 2000-2001 22,057
Having failed to achieve results by force, it is suggested to employ persuasion method. The nation needs to be taken into confidence on the existing situation of expenditure and collections, and also try in bringing about improvements in the attitude of the tax collection staff, and the taxpayer. The CBR department needs complete restructuring and revamping. Also, the present tax models may have to be drastically changed. Fresh enthusiasm and zeal is required to be infused in government departments to make them provide better services. The continuity in present feudal mindset for good governance is most likely to abort the efforts of bridging the expenditure-income gap. The desire to resolve the prevalent issues should come from within. The following measures may be of some help in this regard.
(i) All ministries and government departments should be revamped. Staff strength and their relevant duties ought to be reviewed and working streamlined.
(ii) Excessive use of stationery and telephone should be avoided. Use of official transport for private work should be prevented. Lavish banquets and entertainment of guests should be kept to the minimum. Unnecessary visits to foreign countries and use of local and foreign consultants should also be avoided.
(iii) Wages, salaries and perks of officers should be frozen. Promotions should be held in abeyance.
(iv) Recruitment in lower categories of staff should be stopped. The old concept of moving files from one table to the other through peons should be stopped. In the present age of technological breakthrough, we should make maximum use of the information technology.
(v) Informal economy has not only taken roots in the country, but it also appears to be further expanding. All-out efforts should be made to shake the informal economy from its very roots.
The country is entangled into a debt trap for which lending agencies cannot be blamed as we ourself had been seeking loans from time to time. It is felt that despite the difficulties and discomforts, we should take a conscious decision not to borrow more money and at the same time should think of relieving ourselves from the debt burden. Some difficulties which follow foreign loans is the arrival of experts. With all good intentions that they may have, they are not fully aware of the ground realities. Whether or not they are able to change the situation on the ground, a large chunk of the amount of loan is utilized for the payment of their salaries. Another difficulty is that with each depreciation in the value of rupee, the loan amount gets increased by billions of rupees. It has also been noted that large numbers of employees are retrenched on the advice of the lenders which has resulted in the disturbance of our social equilibrium.
It is suggested that after listening to and acting on the advice of lenders for more than half a century, we should now turn our attention to local talent and try to find solutions to problems, ourselves. The first priority should be given to adopting ways and means of living within our own resources. Proverbially speaking, we should learn to cut our coat according to the cloth that we have. Ostentatious living should also be discouraged.
The current expenditure of the federal government is far in excess of the revenue collected by the Central Board of Revenue (CBR), even if the interest payments are excluded from the expenditure, as shown in the table, thus creating a wide gap between the revenue collection and the expenses.
