Budget Incoming

The final budgetary details will remain unknown till the day of its presentation on the National Assembly floor but what we can assess from the hints dropped here and there by the government’s ministers and officials is that the upcoming budget does not look very good in terms of taxes. Around the world, taxation makes or breaks public trust in their government and tax reforms are the most complicated of public affairs. For Pakistan, getting into a medium-term financial arrangement with the International Monetary Fund (IMF) seems like the blood and soul of its ailing economy. But at what cost? Will the government put the whole burden of taxes on the salaried class? Yes, the services sectors and salaried persons are heavily taxed in Europe but the salaries of Pakistan’s working class stand nowhere in comparison to Europe. Add to that, the inflationary jump and minimal rise in salaries in parallel. Today, the general sales taxes (GST) on a number of essential products are double than they were a few months back. Have we supported the salaried class with an equal pay raise? The answer is a clear no.

All this withstanding, if the new budget comes with more taxes to be deducted from salaries, this will turn into a large-scale discontent among the salaried middle class. Discontent with policies results in protests and work boycotts and these things are not alien to Pakistan’s long history of evading worker-friendly policies.

The Federal Board of Revenue (FBR), as directed by the IMF, has to increase tax collection, but taxing the already taxed sectors is going to lead to public discontent on a larger scale. The FBR needs to prioritise large enterprises, real estate, MNC’s and traders. It needs to spot and catch tax evaders. There are reasons why the American ‘Tax the Rich’ slogan draws global appeal. The solutions lie in extracting taxes from those who are endless beneficiaries of class disproportionality. Delays in FBR’s functions and a possible restructuring are no viable excuses for slamming the burden on the already burdened. If presented as it is, the budget will lead to public ire.

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