Pakistan Tehreek e Insaf (PTI) came into power in 2018. In the last 3 years, the PTI government has changed 4 finance ministers and 6 finance secretaries yet they are not able to control the price hike, petroleum prices and dollar exchange rate. Pakistan is passing through some worst economic disaster. Fiscal budget is usually announced in June every year but due to poor economic policies and IMF pressure, the PTI government announced a ‘Mini Budget’ in upcoming days.
On the terms and conditions dictated by the IMF, The Federal Board of Revenue (FBR) has sent a mini budget of Rs. 350 billion with additional taxes to the Law Division for ratification. After endorsement from the law division, the mini budget will be sent to the Federal Cabinet for approval. The Cabinet will decide whether it would be sent to parliament for proper legislation or a presidential ordinance to be issued for immediate implementation of the mini budget. Due opposition reaction in parliament, it is expected that the sitting government will impose it through presidential ordinance for 120 days.
With mini budget tax exemptions and concessions (Rs 350 billion) are being abolished under IMF dictations. Tax freedom on mobile phones, stationery and packaged food items are likely to be abolished. Sales tax exemptions for the zero-rated sectors are also likely to be abolished. Items with less than 17% sales tax are also likely to be taxed at rate 17% (sales tax). Pakistan has to fulfill these terms and conditions of the IMF before Jan 12, 2022.
The IMF has pledged to comply with its terms for issuing more than one billion in installments of Pakistan. Under these conditions, tax exemption of Rs. 350 billion will have to be abolished. Simply put, new taxes of Rs. 350 billion will be collected from the people of Pakistan. The development budget will have to be reduced by Rs 200 billion; electricity bills will increase but gradually.
Chairman FBR Dr. Ashfaq Ahmad, while speaking to Eat News said, “mini budget is prepared, when the government will give us an order, we will present it without any delay. Tax exemptions are being eliminated. More Tax is imposed on luxury items including imported vehicles/ cars while food items and medicine will remain exempted”.
Parliamentary Secretary for Economic Affairs Shaikh Yaqoob during telephonic conversation with Eat News said; “Mini budget is in the final phases of preparation, later this will be presented in cabinet and parliament subsequently. Once it will be finalized and tabled then we will welcome opposition for debate on it”.
Pakistan Tehreek e Insaf (PTI) Senator Faisal Javid while defending the government policies during senate finance committee meeting said, “Unless there is no final agreement with the IMF, it is not appropriate to talk about this. Opposition should avoid political statements on the economy; it will increase panic in the country. During the previous government era, more loans were taken from the IMF as compared to the current government. Government will not permit political point scoring on national issues”.
This decision (Mini Budget) is being heavily criticized not only by opposition parties but also by common people. Opposition leader in National Assembly Shahbaz Sharif has rejected the Mini Budget, he said, “Government has misguided the nation and business community in Jun 2021 on the occasion of National budget. Previously the government was denying presenting any mini budget; this mini budget is an economic disaster and black cloud of inflation, which will parish the local economy and trade. With new legislation, the government of Pakistan has become only a tax collector for the IMF; now it (IMF) will directly control Pakistan’s economy. We will fight against the ‘mini budget’ in parliament and will also try our best that it won’t be approved by the parliament”.
Senator Sherry Rehman from Pakistan People’s Party (PPP) during an interview with Eat News said“Government is hiding facts and details of agreement with the IMF from the opposition and the nation. There is an increase in the price of gas and petroleum products; inflation is increasing with rocket speed. Pakistan is ahead in terms of inflation rate in the region. Indian currency has high value as compared to our currency. People of Pakistan know the reality of the inflation rate in the region. Government is not successful in overcoming the economic crisis; moreover they (PTI Government) are not allowing the opposition to speak on the issues which are directly linked to the public”.
Dr. Ashfaq Hassan Khan, a renowned economist and Dean of management sciences in National University of Science and Technology (NUST) Islamabad believes that “Mini Budget means more tax on all those items which were previously exempted. It indicates that there will increase in inflation which is linked with the common masses. At the moment it’s too early to say what limit the inflation rate will reach. On the other hand we also observe that few items prices are decreasing in the world market, which includes oil. Government is selling petrol at a high tax rate, as oil prices are decreasing and if the government will not decrease the petrol prices it will help to augment the country’s revenue but it has zero benefits to the nation”.
Experts say it is going to be more adverse in upcoming months as the purchasing power of a common man in Pakistan is dropping continuously. After the mini-budget, there will be another storm of inflation and it will be difficult for the middle class to manage its day-to-day life in Pakistan. High markup rate is attached with a mini budget, which will severely hit the life of all Pakistanis.
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