Pakistan adopts IMF-mandated budget today

Mehtab Haider

ISLAMABAD: Under the dictates of the IMF, the government has secured Parliamentary approval for the budget, and implementation on it will kick-started on Monday.

This budget for 2024-25 has witnessed the highest-ever taxation in the country’s history and the masses will face rising inflationary pressures in days, weeks, and months ahead. The first stroke of the budget has been witnessed by voiceless consumers as the prices of petrol and diesel have gone up by Rs 7.45 and Rs 9.56 per liter respectively. The government also approved hiking of gas prices. The baseline tariff of electricity will also go up from July 2024.

The government has envisaged a CPI-based inflation target of an average of 12 percent. With unprecedented taxation measures and hikes in energy prices including POL, gas, and electricity the envisaged target would be missed if accurate data were to be released by the Pakistan Bureau of Statistics (PBS). The government is left with no other option but to seek a fresh bailout package from the IMF.

The question arises whether Pakistan is heading towards implementing a dictated agenda as happened in the case of Kenya whereby anti-tax riots took precious lives. It is yet to be ascertained how the people of Pakistan absorb the burden on their lives under IMF dictated agenda.

The government has slapped every kind of taxation in the budget except agriculture income and brought millions of retailers into tax ne.

Minister for Finance Mohammad Aurangzeb claimed to bring retailers into tax net but he did not explain how they would be brought into tax without showing the muscles of the government. The government did not make any efforts to bring agriculture income into the tax net.

The tax experts argued that it was a constitutional issue as the agriculture income falls under the domain of the provinces. All four provincial governments did not take any substantial steps to bring retailers into the tax net.

The salaried, and non-salaried classes., removing of exemptions on the majority of stationery items, health-related equipment, property, charitable organizations, mobile phones, vehicles, and many others.

Prime Minister Shehbaz Sharif exempted the income tax on sales of properties by serving retired bureaucrats and serving and retired military personnel.

The government slapped a 10% surcharge on income tax of an annual income of Rs10 million.

Read more: Petrol price increased by Rs7.45 to Rs265.61 per litre for next fortnight

The government has 100% increased the federal excise duty rate for cement to Rs4 per kg. This will increase per bag cement price by at least Rs100.

The FBR has jacked up the federal excise duty (FED) on international travel tickets. For the economy class, the tax rate has been increased to Rs12,500. For the business class, the tax rate has been increased and the new tax per ticket is Rs350,000 for the Americas, Rs105,000 for Middle East and Europe and Rs210,000 for Australia, New Zealand and the Pacific. The government also slapped 3% federal excise duty on the allotment or transfer of property by filers and 5% by non-filers.

The government slapped a Rs500,000 tax on 2,000 square yards to 4,000 square yards farm houses and Rs1 million on over 4,000 square yards of farmhouses in the vicinity of Islamabad Capital Territory. Similarly, the 1,000 square yards to 2,000 yards residential homes, a Rs1 million tax has been imposed while over 2,000 yards homes will attract Rs1.5 million tax. The new taxation measures will yield Rs4 billion for the FBR.

All this has been done to please the IMF. Minister for Finance claimed that Pakistan was vying for a $6-$8 billion package from the IMF.

Two challenges are lying ahead one is to secure an IMF deal under a medium-term Extended Fund Facility (EFF) and the second bringing any solace in the lives of common citizens of Pakistan. The government has so far failed to achieve any one of the objectives so far.