BUDGET 2009-10-AN OVERVIEW OF PROSPECTS
AROOJ ASGHAR (Arooj.Asghar@hotmail.com)
June 22 - 28, 2009
June 13th was the lucky day for Hinna Rabbani Khar Minister of State for Finance and Economic Affairs as she became the first female Pakistani to present budget in the National Assembly of Pakistan. The minister expressed her pride in her budget speech for being the first woman to present the budget. This was the second federal budget by this democratic government and first during the reign of president Zardari. The democratic government has set yet another record as it was exactly according to the vision and guidelines of their shaheed (martyred) leader Mohtarma Banazir Bhutto. When governments and especially democratically elected governments have coalition partners like Mulana Fazal Ur Rahman, MQM, and ANP then budget must only be pro-people. If budget disappoints you then blame your expectations instead of blaming the government.
The minister announced 9-points agenda for social and economic development. The first pillar of the agenda she said was to strengthen the economy and then to improve the social security. Big challenges country is presently facing are poverty, inflation, subsidies withdrawal, price hike, agriculture development, and education and health. Terrorism in the name of Islam is something, which needs separate discussion and will remain a problem for at least next few more years.
Every budget is termed as jugglery of words and numbers. This perception is directly related to the credibility of the government. Shaukat Aziz somehow managed his creditability until his departure as flow of money increased and people felt improvement in their lives. Those were strange days; stock market mostly showed bullish trend on the day country was hit by a suicide attack on Benazir convoy or even during Lal Masjid invasion. The index went to 16000 from 10,000, 16 times which didn't happen again in near future. It was only after his honorable exit, people realized what had happened and now everyone is feeling the pain. Therefore, not blame anyone but blame yourself, is today's advice. In a situation where we are living under continuous life threat; foreign investor is reluctant in investing in Pakistan; no one is sure about the fair utilization of public funds; it is hard to make budget and later justify that.
The government has again disclosed their plan B (a rescue plan) before the implementation of its plan A, unlike others who conceal their plan B until their key plan fails. If Pakistan does not get funds from "Friends of Democratic Pakistan" then IMF will be approached. Therefore, no one should have doubts in mind that IMF will be approached sooner then later. IMF is one of the biggest beneficiaries of this budget. IMF will be able to sell their debts at higher cost and will get share in policymaking rather they will prepare the policy and ensure its implementation. Ministers, advisors, and bureaucrats will be other beneficiaries of the budget, as IMF will draft, finalize the policies whereas our holy cows will not require burning midnight oil. It is hard for these people to visualize any concept, discuss pros and cons, conduct market surveys, and later draft a policy. When people of the country are willing to pay for the consultants then only mad would prefer to work.
President of Pakistan is trying to convince global leaders and agencies to help 'democratic' Pakistan in fight against terrorism. He went a step ahead and said that Pakistan's nuclear assets were safe as long as Pakistan had democracy. Officials of the government are traveling from one corner to other just for the poor people of Pakistan. Federal budget will provide another opportunity to President and his team to visit abroad and get grants, loans, and aids. Just imagine how difficult this job is, imagine yourself in their place, and think you are begging for financial help, your ears would be red, your face would be down, and your throat will be dry. But, our team is so professional that they go with chin up in gait, big smile on their faces, and stay in most expensive hotels and use luxury cars. They shake hand with the counterpart as long as he puts his other hand in his pocket and gives few dollars for the people of Pakistan. Bear this in mind that everything is being done for the poor people of Pakistan otherwise who cares. You would be criminally wrong, if you are thinking that they go abroad and stay in most expensive hotels of the world for themselves; they stay there so as to make wealthy foreigners realize to give aid to Pakistan equivalent to its status. It is a separate debate that we are getting aid slightly higher than the hotel and travel bill of our leadership. By the way, how long and why they give aid/assistance or grant to Pakistan.
Pakistan has first nourished non-state actors; self-proclaimed Jihadis and state is fighting against them when they have become monsters. These non-state actors would have liberated Kashmir if they had any potential. They can only kill innocent people, torture women, and use children for suicide attacks but live underground and always run away in Burka when they are about to capture. Life is so precious for them but they have no value of others. Government has rightly started operation in Swat and millions of people have fled that area. Now our President is visiting country after country to get funds for their re-habilitation without much luck. Again, this time people of Pakistan have been given task to help the internally displaced people (IDP). The government has levied 5% on taxable amount of salaried person and 30% straight on bonus of salaried person hence this collected amount will be utilized to re-habilitate the IDP. We hope these funds be used for the rehabilitation of IDP instead of rehabilitation of any bureaucrats, politicians, or general. These three species are arbitrarily deserved species spread all around us. Anyhow, the budget is providing an opportunity to IDP to start their lives again. Besides this, following is a quick list of goodies of the budget;
Budget has provided immediate relief for serving and retired government employees by providing them fifteen percent salary increment.
Cement industry is happy.
Senior citizens will get 50 percent exemption from tax liabilities if their income does not exceed Rs750,000 a year.
A company and an AOP will now be liable to compute their obligations to pay advance tax not on the basis of their latest tax assessed but on actual turnover of a quarter.
In order to promote documentation, a new tax credit scheme has been introduced in sales tax act. Taxpayers will be able to claim tax credit of 2.5% of tax payable for a tax year. This two and half- percent tax will reduce the overall tax liability of the taxpayer. Now happy?
The launch of two programs for basic education, establishment of 'Community Schools' and 'Education for All', is a good step towards education.
Health Ministry has earmarked Rs50 billion for relief, rehabilitation, reconstruction and security of IDP, which would help consolidate national integrity.
Rs25 billion were allocated for health development projects, including family planning and primary healthcare.
Time limit for issuance of refund order has been enhanced from 45 to 90 days, which will provide reasonable time to tax payer to manage the record and follow up with tax authorities.
In order to increase the share of alternate energy in total energy mix, fiscal incentives have been provided to renewable power projects.
Live stock industry will get benefit from this budget by getting an admissible business expense, if they are utilizing an animal for their business. In the event that the animal dies or in case of permanent incapacitation then the difference of cost will be admissible expense.
Tax credit on charitable donations has been enhanced from fifteen percent to twenty percent.
There is likelihood that government will issue mini-budget by end November or December as we will not be able to get funds from Friends and consequently IMF will be a last resort. Federal budget 2009-10 can be beneficial for certain individuals but certainly not for the entire nation. We are running out of time and our elected representatives must show some seriousness in resolving national issues and focus on the economy. Pakistan is one of the fortune countries of the world, which is hit minimal by global recession but provides good excuse to our pro-government analysts to put major blame on this. In fact, it is a time to capture international market and do the difficult projects, which others are reluctant to do. Lastly, we can only pray that Pakistan could get sincere and competent leadership.