Giving a brief about the core points of the Prime Minister address to a meeting at Banigala, Special Assistant on Information and Broadcasting, Firdous Asiq Awan said that new team of cabinet has been tasked to control high prices spiral. About the rational of changing the finance minister, she clarified the former minster was not an economist therefore a technocrat has been made in-charge of the finance ministry with full decision making powers.
It is good omen that the new ruling leadership has candidly admitted the failure of economic policies pursued during the past nine months. It remains to be seen how fundamental changes can be brought in the regressive fiscal policies which were implemented in the oligarchic elected governments. The ruling PTI seems no exception as it also include oligarchs from feudal class and tycoons from mercantile class. That is why the fiscal measures for revenue generation remained focused on increasing the prices of utilities and petroleum products. These measure no doubt help meet revenue short fall during the current fiscal year but it is no permanent solution Moreover, it hit hard the economy which is in the state of stagflation since 2009.
Actions speak louder than words and the recent decision of the federal government negates what the Prime Minister expects to be delivered by his new team of economic managers. The federal government has handed over Rs. 24 billion from the funds allocated for CPEC related, presumably, productive projects to cabinet divisions for onward discretionary spending on the ongoing parliamentarians’ schemes. Doling out funds to parliamentarians for the lopsided development projects have been grossly misappropriated since 1986 which is an anathematic tradition of political bribes. It also runs against the principle of prudent fiscal discipline, often emphasised by multilateral donor agencies, and it makes mockery of the Prime Minister’s resolve to protect taxpayers’ money. Such like expenditure slippages add to inflation rate which is heading towards double digit because of the regressive fiscal measures taken during the past few months.
The International Monetary Fund (IMF) has always stressed for more reliance on anti-inflationary direct taxes like single value added tax, agriculture income tax, brokers’ tax, professional tax and capital gains tax. The lending agency has also emphasised on removing tax exemptions and excessive tax credit from income tax, sales tax and federal excise duty. None of the governments in the past have accepted these conditions because their incidence would have largely been on rich classes of the country. The present government has also not shown the spine to shift the burden of taxation to elite classes like big land lords, industrialists, owners of big business houses, heavy legal fee earning lawyers, specialist doctors and stock exchange brokers. The government is even reluctant to take stern action against the big power and gas sector pilferers and defaulters of utility bills. The government has shown its inability to explore legal solution for revision of power sector shady agreements of previous governments which has made this sector sinking ship. Let us wait for the magic wand of Aladdin to bring down prices of essential consumers’ goods.
