When we wait for another budget, we fear having to pay more in taxes next year and try to divine what new areas and activities the government will tax.
Budget figures, as they are in billions of rupees, can sometimes be difficult for us to understand. To make them a little more tractable, we can think of the FBR tax revenue this year not as RS12,000 billion, but as RS50,000 paid for by each Pakistani.
This includes infants, children, the elderly, those below the poverty line, overseas Pakistanis, etc. In short, all – and for those who cannot be paid, the rest of us will pick up the tab.
We pay taxes when we buy a soap with soap, a box of juice, a pen or eat at a restaurant. We pay taxes every time we fly or take a bus. We pay taxes every time we go to work on a motorcycle or withdraw cash from a bank. In short, our governments tax almost every activity in life.
Of the RS50,000 you paid to the federal government this year, RS30,000 (60%) was given to the provinces. The federal government retained RS20,000. Next year, your tax bill will rise to RS57,500 (including the 50 Lakh newborn babies that became Pakistanis this year). We start taxing them early, including on infant formula and diapers.
In addition, the federal government also accused an oil tax of RS4,000 from each Pakistani, which is likely to increase to RS5,000 per year. Person in the coming year.
Plus, the federal government received non-tax revenue (passport fees, OGDC outcomes, SBP surplus, etc.) of RS10,000 per year. Person. So the federal government had around RS34,000 per year. Person available, but it still ran a deficit of RS27,000 per person. Person or RS6500 billion (5.55% of GDP). This made each Pakistani debt of a further RS27,000 for a total of RS300,000.
You would think that if the federal government is running such high deficits, it would reduce its own expenses or give less money to the provinces. You would have wrong. The government does not reduce its own expenses or cuts of provincial payments.
The chosen method for the federal government is to borrow the money (both rupees and dollars) to finance the deficit (both fiscal and ongoing account). This is where the IMF comes into the picture. When everyone refuses to lend us more dollars, we go to the IMF to borrow as a lender-of-last resort.
The IMF insists that we cannot borrow without a limit and we should tax the people to meet more than our current needs and just borrow to repay interest on the debt.
This then focuses on the government’s choice to either reduce unnecessary expenses or raise the tax. However, the government refuses to reduce spending, especially those who are politically or otherwise beneficial to its MNAs and MPAs.
Its preferred option is to increase the tax. Here, too, the government has a choice: expanding the grid and taxes of the privileged elite not in the tax network, or tax-class-class Pakistanis already in the net. Our governments typically choose the latter and I think they will do it again.
But as a country we don’t have to go that route. With a belligerent and defeated India that threatens to attack us, we need to increase our defense spending, perhaps with RS600 billion. Similarly, I think we need to work on relieving poverty and illiteracy, and therefore a further RS500 billion should be earmarked for bisp payments to the poor.
The grade that pays RS500 billion All of this is possible if the federal and provincial governments agree to reduce their ‘development’ expenses with RS1300 billion.
This is easy enough to do if the public’s interest is the target. But is it? As most years, FBR will again not meet its income target. This means that the Shehbaz Sharif government next year raises your taxes again. I hear that they have decided to make smart names for new taxes. For example, the petroleum tax, which is now RS78 per Liters, for RS100 per Liter during the year. And an additional charge of RS5 will in the future be called a “carbon tax” to make us feel good about the environment.
Given Levy and Carbon Levy and duty duty pay a motorcyclist RS120 in government taxes per year. Liter. Given that he typically consumes one liter a day, the owner of an RS75,000 bike pays our government RS3,600 in taxes per year. Month.
But interestingly, our government has not been able to collect this very tax from retail stores worth Crores. It is just that taxation of the disorganized, paid, middle class and middle classes is easier than taxing your voting bank or financial man.
For example, the government is thinking of 18% VAT, 4.0% additional VAT and 2.5% income tax on the sale of juice or ice cream, etc., the government is now introducing a “health tax” on products containing sugar.
This should make us feel healthy. Of course, it is only the political naive that will ask that if sugar is bad for us and should be taxed in different products, why not just tax sugar factories directly? Would direct taxation of directly be easier? It will ensure that products that contain more sugar pay more and those that contain less wages less.
The thing is: All Pakistanis are equal, but store lovers, sugar factory owners and large property owners appear to be more similar than the paid classes and motorcycle owners.
But if Pakistan is to develop and leave poverty and illiteracy, it will have to treat all Pakistanis.
The author is former finance minister.
Disclaimer: The views expressed in this piece are the author’s own and does not necessarily reflect Pakinomist.tv’s editorial policy.
Originally published in the news
