Budgeting on hope

If ever a budget raised more questions than answers, this is it. Just consider some of the numbers. Revenue collection is to rise by Rs1.175 trillion rupees of which Rs391 billion will come from direct taxes and Rs784 billion from indirect taxes. The total revenue to be collected from new tax measures is Rs355 bn.

In direct taxes the bulk of the increase is budgeted from income tax (Rs387 bn), of which the new measures account for Rs316 bn. The revised slabs so far are a net revenue loss for the government, with much of the increase to come from hikes on banks’ net income, and other items like increase in tax on sale of cars of engine capacity above 1600ss.

Likewise with indirect taxes. Paradoxically they are counting on a reduction of imports by almost $6 billion, while collections from customs duties are programmed to rise by Rs168 billion, of which new measures account for Rs34 billion. Rising custom duty collections in a time when imports are actually falling can only mean one thing: higher duty rates. But for now all the announcements only tell us where duty reductions have been applied. Nothing about what has been raised.