There is something for everyone in this budget.
The government has promised a budget that seeks to promote the growth and upliftment of the poor, and almost every tool available to the government to achieve this has been used.
Development funding has been raised by more than 40 percent. In almost every sector of the business, especially manufacturing and finance, they have received taxes. The minimum daily wage was increased by more than 20pc, while the salaries of civil servants were increased by 10pc. The latter is important because they tend to set limits on the remuneration of many common businesses.
Obviously, the government is trying to smile as many faces as it could next year.
The companies have received customs duties and taxes, ranging from textiles, paper and board, metal, pharmaceuticals, dyes, chemicals, leather, electronics, cables and fiber optics to cars and more. No companies are exempt from tax when it comes to taxes.
These methods in particular help to promote the collection of local mobile phones as well as to promote the sale of cash at the local sanctuary. Income taxes on stocks have been reduced by 2.5pc in an attempt to boost profits. Return taxes have been reduced nationwide and removed from all businesses in Special Economic Zones. Smaller vehicles have also seen a reduction in sales taxes, or a reduction in federal tax (FED) tax altogether. It’s hard to remember the last time that taxes and jobs paid to industries were great, and sometimes it was so deep, like this.
There is one face that can be hard to smile though. The International Monetary Fund (IMF) will want to know how it wants to pay for all of this.
The government provided 5.1pc of GDP interest next year, but the budget sees the same decline to 6.3pc, about Rs541 billion more than agreed. And this is despite the fact that FY22’s GDP is expected to come in at 1.81 trillion more than expected during the Fund’s program.
The budget increases by raising external debt by about 25pc last year. FBR tax revenue has been set at Rs5,829bn, less Rs134bn less than what has been donated to the IMF. It is unknown at this time what he will do after leaving the post.
Equipment has been upgraded to Rs682bn, while the lion’s share of Rs596bn is the power sector, the most affected part of the IMF. The fund was told that this would be “modified” with the aim of raising the total amount to Rs530bn, but in this budget alone the funding alone exceeded this. The disclosure indicates that some of the provisions made in the Fund may also need to be released.
Last year’s tax revenue met its budget of Rs110bn and Rs81bn, about 74pc. For the next year, it was fixed at Rs184bn when the Fund was promised that this would be disclosed through a positive review. In addition, electricity supplies under the factory support package and zero deduction for offices have been saved and will cost Rs31bn, although this has volunteered to be eliminated.
Similarly, the budget provides K-Electric subsidies for all electricity (Rs22bn) as well as price differentials (Rs56bn while last year spent Rs16bn). The Prime Minister’s promise to keep electricity tariffs has made people smile, but now the government is facing two major challenges to fulfilling this promise. .
The first is to show the IMF that these sessions are important and there is no way around it. And if they are able to do that, the second step is to make sure that taking on these responsibilities does not lead to more debt.
Read: Pakistan will not raise taxes, IMF told Shaukat Tarin
It is important to look at these numbers because they form the basis of the promises made to the IMF and will be the negotiator for the negotiations that take place. The government is committed to raising funds, raising funds and eliminating roundabouts to maintain the program. The fund seeks to increase growth, and distribute some of the fruits of this growth to the people through wage and raise wages. The aim is to reduce inflation by not allowing electricity prices to rise.
But will the government be able to deliver on its commitments?
To do this, it must change its commitment to debtors. One of these is the financial system. And in the meantime, the budget is tight. Other items that need to receive reduced taxes (under Section Eight) “should be reduced and reduce costs other than those related to food, health and education to be brought in”. Significant growth in revenue could come from the same growth, from the simple growth of outgoing and export businesses, although these were cut short.
But the finance minister’s focus on the tax mindset was on so-called “administrative measures”, and he also talked about dragging sellers into the tax net and punishing them for not filing files, perhaps even in prison. It is worth remembering that all of this has already been tested without any side effects.
Raising taxes is a good idea, but relying on it as money in the coming financial year has never worked.. This last attempt was initiated by Shabbar More when he became chairman of FBR, and we all remember how it ended.
What will it be?
The government has twice committed itself to two groups of people and cannot afford to keep them both. To his creditors, he offered straightforward, uncompromising promises of debt relief and deficit, while its citizens pledged to grow and develop. We are now waiting to see which of these items is able to get rid of it for the first time.
The author is a business and financial journalist.
Note: This writing is based on a brief overview of budget notes and is done in a short period of time. It should be read as the original image and not as a whole piece. Detailed writing takes more time to read the major documents that make up the budget.