A day after making a budget speech in the trying times in opposition-sans parliament, Finance Minister Miftah Ismail was caught unprepared by pricking, sugar-coated and loaded questions at the post-budget conference. His poor performance and incomplete answers have left several question marks on the financial bill for 2022-23. In his budget speech, Miftah Ismail emphasized the need to consolidate the economy first and growth later. But at the post-budget conference, the minister said the government was struggling hard to save the country from the default (or Sri Lanka-like situation, this is what he exactly said) before meeting growth and inflation targets. Shockingly, the austerity- and hard difficult decisions-laced budget offers hefty “executive allowances” to senior officers from grade 19 to 222 besides a 15 per cent salary increase and perks for judicial and military officers. The minister had no word to justify the blessings showered on the executive class, whereas the budget hardly offers any shield to the lower middle and poor class from the impending inflation. With the back-to-back hefty increase in petroleum prices and planned hike in electricity and gas bills from July 1, the level of inflation will go up. So will be a rise in poverty levels because of the toughest measures introduced in the budget 2022-23.
When the whole government machinery and ruling political elite are never short of preaching austerity but allocate perks for themselves, public anger will escalate. The minister himself said at the press conference that he had not seen such challenging times in the past 30 years. What aggravates the situation more is the international market which is hitting the record prices of everything from petrol to gas, LNG and cooking oil. If the government is serious about running the economy like a serious government, it should withdraw executive allowance and perks for judicial and army officers announced in the budget. These steps may not help the government save much, but such optics send a message to the public reeling from high prices of essential commodities that the nation stands united in the search for good times. This is the time the government targeted the rich and taxed them. The minister also hinted at bringing about changes, which might be hard for the salaried class, to meet the terms set by the International Monetary Fund. He is hinting at changing income tax changes, which are likely to hit the salaried class. The most likely scenario is that the government may decrease the income tax exemption slab from Rs1.2 million salary a year to Rs600,000, or increase income tax on those drawing salaries more than Rs1 million a year in line with the previous government’s commitment to the IMF. The budget document is also silent on how much money will come from the international money lender and friendly countries like China and Saudi Arabia in the coming fiscal year. If one takes a leaf from the previous government’s financial book, which, no doubt, ran the IMF programme’s commitment successfully, the IMF would have given Rs495 billion to the government in June this year.
So, when the government is taking pains to meet the IMF conditions, it should show a similar commitment to increase the tax base and net the tax avoiders under the law. According to an estimate, every year, tax worth Rs3 trillion is stolen in terms of tax evasion, short recoveries and corrections. Such criminalities do not occur without the active connivance of related officials. The only serious effort was seen during the regime of Shabbar Zaidi as the Federal Board of Revenue chairman. Now, when the government is in the face of a huge deficit of Rs4.2 trillion, and agricultural and industrial sector targets face huge inflation, it should increase income tax besides customs duties and general sales tax.