Budget 2007-08
By Mir Jamilur Rahman
Satureday,June 16,2007
The budget today is exactly one week old. Nearly everybody -- opposition politicians, treasury benches, budget experts and analysts -- have had their say. Depending on which side one is standing, the budget has variously been described as people friendly, pro-elite, anti-people and anti-poor. It has also been called gimmicky and a pathway to prosperity. On the TV talk shows, former finance ministers are seen and heard quarrelling with their current counterparts on the authenticity of the figures and claiming that the budgets presented by them were far better than the one presented last Saturday by the Musharraf government
A national budget per se is neither good nor bad. It is the implementation of its policy targets that makes it good or bad. If the implementation is efficient, the budget would prove good. If its policies are not implemented honestly and correctly, even a good budget will become sour. To be sure, no government can afford to present a budget that does not meet to a great extent the needs of the people. The budget also has to reflect the aspirations of the people otherwise it will be condemned universally making the government unpopular.
The debate on the budget provides the opposition the opportunity to discuss any matter under the sun. That being the case, it is not understandable why the opposition insisted to move an adjournment motion on the Karachi killings on May 12. When the motion was denied, the opposition first protested noisily in front of the speaker's chair and then walked out boycotting the budget speech. It was a defeatist attitude.
It is a huge budget. It is 21 per cent bigger than the last budget. The overall size of the budget stands at 1.874 trillion rupees, a mind-boggling figure. How much is a trillion? It is a million million, 1,000,000,000,000 (12 zeros). Its hugeness is ample proof that Pakistan is moving forward economically and financially. The budget has been generous to government employees and pensioners by raising the amount of their salaries/pensions. It has allocated Rs113.9 billion for relief of the common man in the shape of subsidies that will reduce the prices of pulses, sugar and tea. The budget proposes to increase the minimum monthly wage to Rs4, 600. This amount is not adequate but to extract even this minimum wage from private sector employers would not be an easy task. Many public sector companies have also been provided subsidies to save them from bankruptcy.
The budget proposes to abolish import duty on electric generators for home use. This measure will provide some relief to the people who live under the constant shadow of load-shedding. A similar relief by abolishing sales tax ought to be provided to people who install security alarm system. It is not fair that people are not provided state security for their homes and hearths and when some of them make their own security arrangements, they are punished with 15 per cent sales tax.
As a policy matter children's apparel and shoes should be exempt from any tax. Babies should also not be charged any tax on the milk they drink. Similarly, all medicines should be free of taxes. It would be most cruel to tax a person for having falling ill. The heavy taxation under various heads on air travel has stunted the growth of air travel industry. In fact, it has started going downhill. Taxation on air travel should be abolished entirely or reduced to a reasonable level. The 15 per cent sales tax on cellular calls is on the higher side by international standards. This should be halved. This reduction will increase the number of cellular users and the government will earn much more than it is earning now from cellular phones.
The truth is the budget has progressively lost its mystical aura and people are no more excited for the new budget as they used to be. The reason is that most of the non-tax budgetary proposals are known well before the budget day. For instance, the proposals to raise salaries and pensions and the subsidy on food items were publicly known well ahead of the budget. Obviously, the foreknowledge that salaries and pensions would be raised and prices of food items would be slashed could not be exploited to one's advantage, as could be the case with tax proposals.
The liberalised trade regime has also contributed to the transparency of budgetary process reducing greatly the bureaucratic stranglehold on the commerce and trade. The liberalisation has also reduced the budget excitement. There was a time not long ago when inside information about the change in import duties of some essential items could make a trader into a millionaire. If the trader or industrialist could not lay his hand on what the budget would bring, he may lose a chance of making a million or two. In those times the chief controller of imports & exports, a grade-19 post, was considered a kingpin of commerce and industry. It was a prized post. Nothing could be imported or exported without first obtaining a licence from CCI&E.
Two other customs rules come to mind, which appear ridiculous with hindsight. It was an offence to keep unauthorised foreign exchange. While travelling to or from Pakistan, body search was made to ensure that the passenger was not taking out or bringing in foreign exchange. How times have changed. Now Pakistanis can open and operate a foreign currency account in Pakistan without any hassle.
The telephone instrument was another prohibited item. It was immediately confiscated if found in the luggage of a homecoming traveller. These confiscated instruments were handed over to the PTCL for safekeeping! However, the establishment of cellular phone companies have changed it all. Now there is no restriction on bringing in or taking out a telephone instrument.
Severe criticism has been made regarding international debt, which now amounts to 38 billion dollars. The criticism stems from the repeated government claim that it has broken the kashkol (begging bowl). It was a wrong and superfluous claim. A developing country cannot meet its economic targets if it were to forgo loans. A good credit rating is an important aid in getting loans and Pakistan has now no difficulty in obtaining loans because it is sustaining its growth at a steady rate of seven per cent for the last few years. Moreover, Pakistan now has a robust amount of 15 billion dollars in the forex reserves. That also helps in obtaining loans on easy terms.
It now all depends on the government to make the budgetary proposals work for the common man. The government's first test would be the opening of thousands of utility stores and keeping them stored with food items. That will eventually decide if Budget-08 was good.
The writer is a freelance columnist.
Email:
mirjrahman@yahoo.com
http://www.thenews.com.pk/daily_detail.asp?id=60792