THIS is with reference to the report ‘Tarin previews budget: No new taxes, but system to be rationalised’ (May 31). Finance Minister Shaukat Tarin announced that there would be no new taxes in the upcoming budget. The decision puzzles one as, at the same time, an increase of 40 per cent is envisaged in Public Sector Development Programme (PSDP) spending.
It is not disclosed how the resources will be mobilised for higher development spending. One can only insinuate that the finance minister may consider resorting to massive external and domestic borrowing to cover the gap. Pakistan is already caught up in a debt trap that can further worsen.
Health officials and people at large have been urging the government for the last two years to levy more taxes on sugary drinks and cigarettes. In this connection, voice from inside the government is now being heard as well.
Independent economists also demand additional taxes on luxury goods that are consumed by the affluent class to raise revenues. Further, a complete ban is suggested on import of luxury and unnecessary items to cut the import bill and curb dollar borrowings being spent on such frivolous imports.
The bottom line is: rich must be taxed more to subsidise the unprivileged segments of the population rather than vice versa. Unfortunately, poorer sections of the population have been bearing the burden of taxes and borrowings for the benefit of the privileged class for long and there seems to be no change in that status.
The finance minister has made no mention of the mounting pension bill that is a great burden on the budget. A pay and pension committee was set up by the government last year under the chairmanship of a former bureaucrat, which in itself was a clear conflict of interest. The committee, whose findings are not known, should have been headed by an independent expert for an impartial and unconstrained opinion.
The finance minister may be an astute banker, but is not an expert economist. The management of the economy requires something more – a specialist who must be a highly accomplished and distinguished economist having rich academic background and vast experience. Perhaps, finance minister’s rich experience in banking sways his preference for more borrowings than for more taxes.
Published in Dawn, June 5th, 2021