Budgeting on hope

Govt prays oil will fall, revenues will rise as the economy slows. The budget is built on high hopes.

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.

 

Note: Access to the full article is limited to paid subscribers only. If you are already a paid subscriber, please here. Otherwise, you can choose to purchase a subscription package below for as low as Rs 275/month:

Choose Your Subscription Plan

Article continues after this advertisement

Note: Access to the full article is limited to paid subscribers only. If you are already a paid subscriber, please Otherwise, you can choose to purchase a subscription package below for as low as Rs 275/month:

 

Khurram Husain
The author is Editor at Profit and can be reached at [email protected]

8 COMMENTS

  1. Thank you, Khurram for this indispensably realistic analysis. I wish economic analysts and research institutions become a formidable force in Pakistan. Unless a strong tradition of bipartisan, objective analysis of economic trends, constraints and opportunities develops, Pakistan cannot secure robust economic policy planning and decision-making.

  2. Critical and clear analysis. Land tax reforms have not been highlighted much in any other media analysis and perhaps need a separate write up in future as huge amounts of non-productive wealth is stowed away from taxation to be of any value to country at large. Also developed land is held indefinitely while people need housing so a step in right direction but to be followed up in a CoE between all future administrations.

LEAVE A REPLY

Please enter your comment!
Please enter your name here

Popular Posts