Prime minister Shehbaz Sharif has heaped praise on the overall direction of federal budget 2022-23, arguing that the budget has reflected a significant improvement in several ways. For example, there has been increase in tax rates for only the rich people.
His is the right approach to increasing tax collection in view of the fact that the taxation system, which is rightly viewed as inequitable and unfair, has historically been skewed in favour of the rich. But the question is whether this step will help the taxation machinery to achieve its target in an environment of lower imports due to a tough fiscal contractionary policy that the government has decided to pursue because of a woefully bad balance of payment situation.
The other point I wish to make is that our policymakers often cite the case of India’s economy or seek to draw parallels between the economies of India and Pakistan in order to substantiate their arguments. This is highly erroneous approach to the issue, to say the least. Our foreign exchange reserves have declined to a mere 10 billion dollars while India has been able to increase its reserves to around 700 billion dollars mainly because of very strong protracted inflows of FDI and robust growth in workers’ remittances. We’re far, far away from our neighbour although we share border with it. There must be no doubts or illusions about it.
The ever-growing size of our external liabilities and our increasing lack of capacity to make payments against interest and principal amounts has already deprived us of our economic sovereignty. This budget or that budget deserves no excessive praise because a budget is only aimed at delineating an economic direction — right or wrong.
Tehsin Wyne (Lahore)
Copyright Business Recorder, 2022
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