Finally, the much-awaited budget has been presented in the National Assembly – immediately after Pakistan’s high-powered delegation concluded its visit to China.
The ongoing month of June will be remembered to dictate to Pakistan two preconditions. First, Pakistan has to present a budget for the financial year 2024-25 as per the directions of the International Monetary Fund (IMF) to secure the next Extended Fund Facility amounting to $6 billion. Second, Pakistan has to ensure the foolproof security of the Chinese citizens (especially engineers) on its land in order to secure China’s financial help such as investing in Pakistan and postponing the service of loans. Of these two, on June 12, Pakistan has delivered on the first precondition. However, Pakistan has yet to deliver on the second one by grappling with the Tehreek-e-Taliban Pakistan (TTP) functional in the northwest and the Baloch insurgents active in the southwest of its land.
The first precondition has brought Pakistan to the pass of doing what it procrastinated to do: taxing the undertaxed and untaxed sectors of the economy such as the real estate sector and non-salaried class. The growth in the real estate sector had devastated Pakistan financially. Other than buying foreign currency, the real estate sector remained the mainstay of parking money (whether earned from legal or illegal sources). Even local industrialists were found to abandon their work and invest in the real estate sector to earn confirmed profits. The entrepreneur’s intellect was reduced to judging where to buy a plot and when to sell it. That is it. Such a phenomenon blunted mental faculties to launching business initiatives and running small industries, which could be export-oriented. Neither mind nor money was available to contribute to the economy innovatively. Even the youth who passed out from renowned universities could be found engaged in this easy-money-minting process. An extension of this trend can be found in the Dubai leaks. Further, with the closure or absence of local industry, the citizens started relying on foreign goods, thereby increasing the import bill. By introducing a tax regime, the budget has tried to correct this anomaly of investing in a sector that remained hogged by non-tax filers falling outside the ambit of tax documents.
Similarly, the non-salaried class such as doctors and lawyers had made Pakistan an earning heaven by working in the private sector without their being a significant part of any direct tax-paying regime. Their offices functioned as factories working day and night earning money in the name of private practice. They should earn money commensurate with their knowledge and skill but they should pay direct taxes to contribute to the economy of the country which is sustaining them. They sought benefits from the educational and training institutes of the country but afterward, they chose to stand aside by prevaricating their responsibilities for returning the favour to the country in economic (tax) terms. The budget has tried to rectify this anomaly as well.
Generally speaking, through the introduced budgetary manoeuvers, Pakistan has finally set foot on the path of economic self-reliance. That is, tax the citizens to meet the country’s expenditures, instead of meeting the cost of running the country from borrowed money. The world’s donors have refused to offer any free lunch. Pakistan has to stand on its own feet. Taxing the citizens will do another favour: it will cultivate a responsible citizenry. When a country relies on its citizens, the country works in the favour of its benefactors, the citizens. Presently, the courts are brimming with complaints lodged by citizens against the highhandedness of the state functionaries of all hues. Taxing the citizens to sustain the functioning of the government is bound to end the citizen-state estrangement. The state functionaries would work for the welfare of the citizens and not to exasperate them. In fact, the budget has done a great favour to the citizens by empowering them to decide on the country’s destiny. The present budget is just a beginning in this direction.
The budget has also heralded the end of the phase of Pakistan’s reliance on the blood-stained foreign money funneled during an international conflict engulfing any neighborhood. The money soaked in blood accrued little benefits to Pakistan. Some of it landed in bank accounts of certain Pakistani officials opened outside Pakistan. Some of it entered Pakistan to create islands of luxury, thereby disrupting the tenor of living. An all-have class got birth alluring others to follow suit. The budget is an effort to achieve the goal of economic self-sustenance.
The budget has proclaimed one thing clearly: the economy will be documented at all costs. Now, Pakistan has to sanctify the budget by getting it converted into a finance bill to secure the IMF’s loan. Though the budget presenter hinted at the privatization of certain national corporations and the devolution of certain ministries to the provinces, the presenter did not speak on the measures be taken to curb smuggling. Pakistan has to make its borders unerring to protect the local industry, otherwise, the menace of smuggling will pose a major challenge to the economy. Nevertheless, a major challenge would be how to convince the politically divided and disaffected citizenry to get documented and pay taxes.
The second precondition is yet to be materialized. Pakistan has to satisfy China on the security of the Chinese personnel and the money they have invested in Pakistan. This is a task as huge as to implement the announced budget. Dealing with the TTP is more difficult than dealing with the Baloch insurgents.
Dr Qaisar Rashid
The writer is a freelance columnist. He can be reached at qaisarrashid@yahoo.com