Proposals and recommendations are being minutely examined to accommodate
From SHAMIM AHMED RIZVI,
Apr 12 - 18, 2004
The officers and staff in the Ministry of Finance and its attached department are working overtime these days for preparing budget proposals for the financial year 2004-05 to be presented to the National Assembly by the second week of June. There are strong indications that the Finance Minister will announce this year various measures to provide relief to the general public.
Proposals and recommendations received from various Ministries, trade and business organizations, stock exchanges and general public are being minutely examined to accommodate as many demands for relief as possible within the resource constraints. There are reports that the rate of GST may be reduced besides lowering the taxes on the over-taxed petroleum products. According to official sources Finance Ministry and Central Board of Revenue with inputs from Ministry of Commerce, Chambers of Commerce and Industry and private sector entrepreneurs are actively engaged in discussions on providing incentives to investors to boost badly needed investment to achieve high growth rate, providing relief to the common man and setting aside more than Rs. 160 billion for Public Sector Programmes.
The economic managers are conscious of the fact that despite achieving macro-level targets, the benefit could not trickle down to the lower level. The soaring unemployment issue, increasing poverty level and neglect of social sector are a few issues the Government intends to seriously address in the coming budget, the sources said. The difficult task of preparing taxation proposals with a focus to put minimum burden on low income groups is being handled by economic experts carefully as the common man is already reeling under pressure of high rate of utility services such as electricity and gas. Petroleum prices have sky-rocketed which has resulted in high transportation charges and high cost of agriculture and industrial production. The task before the economic managers is much more difficult this time as zero-rated WTO regime is being enforced in January 2005 and new budget has to reflect Pakistan's response to it. The world's economic scenario is going to be changed next year and only those countries will survive which have high quality with low cost products for offering in the international markets. The Government has to give due weighting to the proposals of the industrialists to reduce cost of production. The forthcoming budge is, therefore, a test case for the Government.
Some new proposals and incentives to further boost investment in stock business and bring about more transparency in the bourses are also expected to be included in the budget. The delicate sector of foreign direct investment where the Government could not succeed much will get more attention and more incentives for multinationals and other foreign entrepreneurs are expected to be included in the budget document. The flow of foreign aid from donor countries and particularly from the United States has made the task for economic managers much easy for allocating handsome funds to social sector programmes, especially to fun-starved education and health sector.
Significant allocation has to be made for poverty alleviation and for projects aiming to create employment for jobless people. It is a source of great embarrassment for the Economic Managers of the country that despite strong improvement in macro economic indicators, the people remain as deprived as ever. Their miseries have rather multiplied during this period of economic turnaround of which the government is so boastful. The unemployment which remained below 5 percent mark in 1980s is highest ever now at above 8 percent pushing more and more people into the net of grinding poverty. Poverty level has risen from 15 percent to 38 percent in the last 15 years. It is commonly believed that the government either lacks the commitment or the planners have no capacity to do something meaningful to mitigate poverty in the near future.
In the coming budget, the Government has to come out with concrete proposals to counter this growing perception. However, this is perhaps for the first time that pre-budget reports spark confidence amongst citizens about the taxation proposals. In the past, news items about possible increase in rates and number of taxes not only led to hike in prices but also encourage hoarding. This time, the Finance Minister himself categorically stated on more than one occasion that the number of taxes would be reduced and rates rationalized. Such steps are necessary because a perception has developed that exorbitant taxes and cumbersome procedures have pushed up prices, hampered growth and served as disincentive for expansion of tax net. The relief is due as President Pervez Musharraf had also promised to the nation that the Government would pass it on to the people when its own financial health improves.