The Finance Bill 2022, or the budget for the upcoming year, unsurprisingly sailed through the lower house of parliament on Wednesday, after a whole host of changes from the one originally presented by Finance Minister Miftah Ismail earlier in the month. The government claims that the changes made in this period are not at the behest of the IMF, but a means to fulfil the outgoing government’s commitments and balance the taxation regime, but at this point, there is not much difference between them.
One of the more significant changes is the addition of a Rs50 fuel levy, which the Finance Minister has claimed will not be imposed immediately. However, with the way things stand and the government desperately looking to unlock the IMF funding, if our team is unable to convince the IMF to release funds, the levy and all the other ‘hard’ measures proposed are likely to be implemented sooner rather than later.
The Finance Bill passed through with little disagreement in the Assembly, but this is not shocking, given that the opposition is unrepresented in the lower house of parliament ever since PTI walked out. However, even last year, when the PTI government was in power, we saw little discussion and debate on the budget. This is primarily because poor policies in the past and the global economic stagnation have shrunk the space for manoeuvring too much or employing different strategies; surviving the economic crisis is the only objective at this point.
The greatest positive in this year’s budget is the robustness of taxation mechanisms. The significant increases in the income tax of higher-income groups and a super tax on industries are important changes to the system that help correct the imbalance of regressive taxation policies versus those on the progressive end. But at the same time, the heavy sales taxes on all commodities in a time of rapid inflation is counteracting levies imposed on the wealthier sections of society.
Getting the budget passed was a key milestone to cross off the list in our attempts to re-enter the IMF programme. Let’s wait to assess what else remains. It is up to the government to ensure that the difficult decisions we are taking now are worth something later. This will only be possible through a long-term vision and focus on increasing production numbers across all sectors.
One of the more significant changes is the addition of a Rs50 fuel levy, which the Finance Minister has claimed will not be imposed immediately. However, with the way things stand and the government desperately looking to unlock the IMF funding, if our team is unable to convince the IMF to release funds, the levy and all the other ‘hard’ measures proposed are likely to be implemented sooner rather than later.
The Finance Bill passed through with little disagreement in the Assembly, but this is not shocking, given that the opposition is unrepresented in the lower house of parliament ever since PTI walked out. However, even last year, when the PTI government was in power, we saw little discussion and debate on the budget. This is primarily because poor policies in the past and the global economic stagnation have shrunk the space for manoeuvring too much or employing different strategies; surviving the economic crisis is the only objective at this point.
The greatest positive in this year’s budget is the robustness of taxation mechanisms. The significant increases in the income tax of higher-income groups and a super tax on industries are important changes to the system that help correct the imbalance of regressive taxation policies versus those on the progressive end. But at the same time, the heavy sales taxes on all commodities in a time of rapid inflation is counteracting levies imposed on the wealthier sections of society.
Getting the budget passed was a key milestone to cross off the list in our attempts to re-enter the IMF programme. Let’s wait to assess what else remains. It is up to the government to ensure that the difficult decisions we are taking now are worth something later. This will only be possible through a long-term vision and focus on increasing production numbers across all sectors.
