Mansoor Sadiq

Instead of enhancing across-the-board taxes and raising the ratio of additional taxes on commodities, petroleum, and billings, the government should come forward with a categorical policy mechanism to mount tax revenues for those making good money, said Dr. Badiea Shaukat, Economic and Research Consultant at the Sustainable Development Policy Institute (SDPI).

Talking to WealthPK, Dr. Badiea said contrary to the IMF’s wish list, the authorities in Pakistan once more burdened the downtrodden segments through the mini-budget, raising unprecedented inflation at a time when the entire country was facing multiple financial challenges, closure of industries and economic woes.

He said the IMF Managing Director Kristalina Georgieva had urged Pakistan to protect its poor and slap direct taxes on the wealthy and influential people. The Fund also asked the Government of Pakistan to take steps to avoid facing a situation where its debts need to be restructured. “The IMF wants Pakistan to protect its poor, as one-third of the population had to face devasting flash floods in 2022, which caused an estimated damage of more than $30 billion,” said Dr. Badiea, citing a reference from the statement of Ms Kristalina.

Badiea urged the government to devise a comprehensive mechanism in view of targeted subsidies to benefit the poor instead of announcing across-the-board subsidies benefiting the wealthy sections with subsidies. A categorical mechanism needs to be devised to facilitate the poor and the unprivileged with subsidies on the basic amenities of life, he added.

Commenting on the recent Finance Bill’s repercussions and the resultant wave of inflation through the mini-budget, Dr. Badiea said the increasing ratio of taxes will further hit the economy hard, as enhancing the tax ratio in a stagnant economy will only burden it, resulting in an increased ratio of poverty and unemployment.

Talking about the austerity drive on part of the government to cut expenditures, Dr. Badiea said the government had devised a herculean task by announcing the austerity measures with the sole objective of appeasing the IMF and running the economy to reduce the budget deficit and service loans.

Commenting on the inadequacy of austerity drive on part of the government, Dr. Badiea said under the austerity drive, the government had announced to reduce expenses of its departments by 15 percent, curb the purchase and unnecessary use of vehicles, and deny plots to government officials, but these measures were insufficient to meet the needs of the ongoing economic crisis.

He elaborated that the IMF wanted the government to immediately increase the ratio of direct taxes for those who were particularly earning attractive incomes with respective benefits of perks and privileges. “The government needs to devise a mechanism to tax them through deduction at the very source; they are earning big amounts and salaries as practiced in other parts of the world.” Dr. Badiea underlined that Pakistan’s economic woes could only be settled through consistent policies by widening the tax net and making regulatory measures for businesses and individuals with requirements to disclose their earnings strictly.

Credit: Independent News Pakistan-WealthPk