‘Have a nice budget speech’

Hussain H Zaidi

“Sir, I’m here to brief you on the upcoming budget. My team has burnt the midnight oil in drawing up the proposals.”
“Oh, really? I appreciate the efforts you have put in. But my advice to you is not to take budget-making that seriously. Yes, every year the government goes through the rigmarole of preparing a budget and getting it passed by parliament, because it’s a constitutional obligation. And this to me is the most important thing about the budget. We’ve already struck an alliance with a key opposition party, which gives us a comfortable majority in both houses of parliament. So rest assured that, whatever your proposals, they will be carried through parliament. The rest doesn’t hold much significance for me.”
“But with due respect, sir, budgeting is one of the most crucial decisions that the government makes, and prudence dictates it must come out with the optimal allocation of resources.”
“Well, I’m not an economist and have no taste for the jugglery of figures, which you put together to make the budget document. But I know that you can never draw up a budget which is palatable to all sections of society. I give you some examples: Either you subsidise the public sector or not. If you subsidise, the donors will come hard on you; if you don’t, you will invite the wrath of those who are addicted to consuming at the state’s expense. Either you increase the salaries of government employees or not. In case you do so, you will come in for criticism for lack of austerity; in case you don’t, you will be run down for having turned your back on the masses. By the same token, either you fix minimum wages or not. If yes, you’ll be termed anti-businesses; if not, you’ll be branded as anti-workers.
“Either you push up taxes or not. In the event you do, it will be regarded as an attempt to throttle the growth of trade and industry; in the event you don’t, you will be charged with lacking the political will to broaden the tax base. I can go on and on, but the crux of the matter is that whatever you do, you will give rise to criticism. The media, need I remind you, are keen to sniff out anything which they can turn into breaking news and point the finger at the people in power just for the sake of doing so. The columnists and the anchorpersons, who labour under the delusion that they can make and unmake governments, dabble with issues of which they know nothing. Of course, I don’t mind being criticised – I know I am the most hated person in this country. But when you know that in any case you will run the gauntlet of those who don’t like your face, you should make light of such criticism.”
“Sir, you have hit the nail on the head. These opinion-makers write and speak from force of habit rather than out of conviction. The reason I need your attention right now is that some budgetary proposals may have significant political implications for us; so we need your consent before we go ahead with them.”
“Yes. I’m all ears.”
“We need to increase public revenue. Fiscal deficit is on the increase and the only way to bring it down is to broaden the tax net.”
“What stops you from widening the tax net?”
“Who should we impose new taxes on? Big landlords? Rich industrialists? Wealthy stockbrokers? No one in this country wants to pay taxes.”
“I know governments in the past toyed with the idea of levying agriculture income tax but lacked the will to do so. I would have no problem with the landlords being taxed, were they not our important vote bank. Likewise, the capitalists are our financiers. Any other proposals?”
“At least we can act against tax evaders.”
“Everyone who matters in our society is a tax evader. Aren’t you and your colleagues? If we start taking on the big guns, we’ll soon end up by being nowhere. At any rate, we believe in grand reconciliation, and when I say reconciliation, I mean reconciliation with those who matter and not with every Tom, Dick and Harry. I trust you don’t want our reconciliation policy to fall through.”
“Not in the least, sir. But it means we’re not going to have new taxes. But if that’s the case, how will the government meet its expenditure?”
“May I remind you that your job is to answer rather than ask questions? Now, tell me how does every year the government spends more than it earns?”
“By borrowing.”
“What’s wrong with persisting with borrowing?”
“Sir, since external assistance has dried up, we have to borrow in the main from the central bank. Like a faithful servant, the bank is always at our beck and call. But the problem is that for every penny that the central bank lends us, it has to print money.”
“Isn’t the State Bank authorised to print money? I mean, we conveniently borrow from the bank, which, on its part, prints money. To me this seems to be a perfect arrangement.”
“I’m afraid it is not, sir. Creation of money by the central bank drives up prices.”
“I am not an expert in money matters. But I know that when prices go up, businesses are better off and economic activity increases. So then what makes inflation a problem for us?”
“To make things simple, inflation drives down people’s purchasing power and hits wage-earners hard.”
“You mean the ordinary people, who are our main vote bank.”
“Yes, sir.”
“Why don’t we increase their salaries, the majority of them, I believe, are government employees?
“With due respect, sir, this is no solution to the problem. Last year we had a hefty increase in salaries and pensions, but the wage earners continue to grumble about the rising cost of living.”
“Maybe. But aren’t you familiar with the psychology of our people? They love numbers and for them bigger is better. Faced with the choice between low prices and low wages on the one hand and high prices and high wages on the other, nine out of ten will go for the latter option. So announce a pay and pension raise, and don’t bother about inflation. Have a nice budget speech.”

The writer is a freelance contributor based in Islamabad.
Email: hussainhzaidi@gmail.com