Watered down mini-budget – Pakistan Observer

THE government on Thursday announced new revenue measures of more than 50 billion rupees and lifted the ban on all non-essential or luxury imports to meet another side request from the International Monetary Fund (IMF) before approving the Pakistan bailout later this month. .

Giving details of what is seen as a watered-down mini-budget, Finance Minister Miftah Ismail said Rs 36 billion in additional taxes had been imposed on cigarettes and tobacco and around Rs 14 billion would come from changes to the tax regime for retailers.

He said some of the other proposed tax relief measures for real estate, capital markets, banking and other sectors have been postponed for now.

It stands to reason that the additional taxes imposed would ultimately be paid for by the final consumer and, therefore, would add to the miseries of certain segments of society.

However, it must be understood that the government ultimately decided not to impose taxes on commonly used items and essential services.

The decision to postpone relief measures for influential lobbies is also a step in the right direction and we hope that common sense will prevail and that the government will not offer undue relief to those who do not pay the full of their taxes for various reasons and factors.

But the removal of the luxury goods import ban was unfortunate because it sent false signals that the country was no longer economically sovereign.

Pakistan is experiencing the worst currency crisis and it is running from pillar to post to firm up external flows at costs that aggravate the hardships of the common man.

Therefore, the government rightly imposed a ban on luxury items and as a result, the country has not only been able to effectively manage its limited foreign exchange reserves over the past two months, but this decision has also helped to stabilize the local currency.

The government was obviously pressured by powerful donors to lift the ban, fearing that failure to comply could create legal problems such as punitive action by the World Trade Organization (WTO).

Allowing foreign exchange companies to export dollars and lifting the ban on luxury imports would increase the demand for dollars and as a result the rupee could depreciate again with further inflationary impact for the Pakistanis.

The loss of economic sovereignty is the price of our failures to mobilize national resources and the reluctance of powerful lobbies and sectors to pay the taxes due.

The government has however done well in deciding to regularize imports of luxury items by imposing restrictive duties to discourage their imports as we cannot afford to waste loan dollars on luxury goods.

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