Budget FY14: a national agenda needed

The upcoming fiscal budget must be more than the run-of-the-mill exercise of scraping together estimates of government revenues and expenditures - estimates that are good enough only for a couple of days headlines, only to be revised numerous times in the months that follow.
A news article featured in the Business Recorder on Tuesday quoted former State Bank Governor Dr Ishrat Husain who stated that, "the federal government must present a detailed economic policy outlining its key focus for the next five years."
The words of the veteran economist underscore the harsh reality that the daunting challenges facing this country can only be overcome by a collective response from the entire nation. Hence the job of the government in-waiting is to provide visionary leadership and instil motivation within the hearts and minds of all Pakistanis.
On the fiscal front, such a policy must spell out a road map for devising a fair tax policy which taxes all incomes, irrespective of the source. From an accountants perspective, it is notable that there is more to be gained from belling the cats in the services sector than going after the agriculture sector, considering that the former constitutes about 56 percent of the national income while the latter makes up just about a fifth of that tally.
However, this assertion is ignorant of a basic national reality: many in the services sector are able to evade their tax liability by claiming income derived from this sector as having been earned through agricultural land holdings.
Governments all across the globe monitor expenditures to assess incomes. Pakistani government also has the capability to do the same, given the availability of travel itineraries, utility bills and real estate records. But even with this information, the government can do little "given that so many sectors are either not taxed or are under taxed," tax expert Shabbar Zaidi told BR Research in an interview last month.
The provincial governments have a role to play here and the Finance Ministry will have to take them on board for the same. Even if the same withholding tax regime remains prevalent in the agriculture sector, the tax rates charged under it must be made commensurable to other sectors, thus doing away with the incentive to misreport incomes.
A roadmap for phasing out turnover tax is badly needed, as this easy way of meeting government revenue targets is inherently against the principles of fair taxation.
The road to financial reform and national rebuilding is arduous. But the government in-waiting has a lot of room to manoeuvre politically. Unlike its predecessor, this government will not be hinged on the support of a volatile consortium of coalition partners.
If the government swallows the bitter pill in its inaugural budget, the fruits of this labour will ripen long before the next General Elections scheduled for 2018. The stakes have never been higher; now the motivation to meet the persistent national challenges must be unequivocal and the upcoming budget will provide proof of the pudding.