As the Federal Cabinet met yesterday to discuss the upcoming national budget, what is clear is that these meetings and discussions are not about the structure of the budget, but on minor details. We know the structure: more taxation and higher allocations to the military – no matter how much rhetoric of it being “pro-poor” is thrust on us. This has to change, and there are a variety of recommendations that can be easily implemented, if the government is willing to listen.

The taxation system that is grossly unfair and compounds the huge problem of revenue collection that must be remedied if the state is to deal with terrorism and climate change. Our budgetary deficit is filled by debt, and not just any debt - expensive foreign debt that constitutes one third of our deficit.

Raftaar, an economic reform platform made of a consortium of Pakistan’s top economists and economic think tanks, reports that Pakistan collected Rs 2,800 billion in tax in 2014-15, where it should have collected Rs 3,975 billion. This is more than what we spend on education and health combined. The gap is due to tax evasion (illegal), tax avoidance (legal) and foregone revenue through exemptions and concessions given by the government. This is something every politician is cognisant of due to the storm created by the Panama leaks. Unless the issue of tax exemption due to institutional corruption is not addressed by legislations, the budget will continue to extract whatever it can from the lower and middle classes by means of taxes, while the rich can bribe their way to hiding their money from taxation.

Indirect taxes are regressive and even direct taxes can be made better. Raftaar estimates that in Pakistan the highest income tax rate is applied at fifty times per capita income compared to eighteen times in Bangladesh, eight times in Sri Lanka and ten times in India. This means rich Pakistanis can have a lot more income than their counterparts in South Asia before they pay the highest rate of income tax. With the media focusing almost exclusively on tax evasion by well-off individuals in Pakistan, tax evasion by companies tends to get ignored. Thus major reforms in property tax should be another priority. In Punjab alone, it is estimated that the revenue potential in Urban Immovable Property Tax is almost Rs 25 billion. If collected, this would be ten times more than what is actually collected.

Loopholes that whiten money need to be plugged. This is the demand of the day from those creating the budget and the legislators who will debate it. Subsidies must go only to the poor, and not to business interests that take concessions without turning them into sustainable economic returns.