Under the Shadow of IMF | Editorial

The PML(N)-led coalition government faces serious challenges on the economic front. As the government prepares the budget, it is required to cope with a fast-growing deficit that has surged from Rs 2,565 billion in the first nine months to Rs 5,000 million in June. After total revenue clocked in at Rs 6,000 billion, only Rs 1,000 billion will be left with the government to utilize. The Public Sector Development Program (PSDP) for the next fiscal year has already been halved to Rs 480 billion under the IMF’s instructions while the government is required to set Rs7,200 billion as the revenue target for 2022-23. As things stand there will be nothing left in the national kitty after repayment of debt and instalments.

The ambitious revenue target requires a meaningful reduction in government expenditure. On Tuesday the federal government belatedly ordered a 40-percent reduction in the fuel quota for all government employees, including cabinet members. The federal cabinet also decided to restore Saturday as a public holiday in an effort to save electricity. This is a good beginning but much more needs to be done. Not everybody in the government however seems to be convinced of the need for austerity. A report tells of the Religious Affairs Ministry having finalized a list of 200 employees for free Hajj this year which would cost Rs170 million of the taxpayer’s money.

There is a need to put the major burden of new taxes on the rich rather than the common man who is already finding it difficult to make both ends meet. There is also a need to reduce indirect taxation. Instead of putting most of the burden on the salaried employees, attempts should be made to bring the extra-large trading community under the tax net. The real estate sector, which has continued to evade even minimal levels of taxation, should be made to pay the dues. Similarly agriculture should be brought under the tax net. All these sectors continue to enjoy tax immunity because they have strong lobbies in political parties. It is time the coalition comprising nine political parties puts party interests behind to bring the entire section of he population with taxable incomes under the net. This alone can rid the successive governments of the humiliation of begging friendly countries for loans or seeking the painful help of the Fund.​

Source: Published in Pakistan Today

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