No escape from an elitist budget

LAHORE: The budget has finally passed with the government refusing to budge from its original proposals. It has agreed to exempt retired and serving government and military officers from advance income tax on the sale or transfer of property. The perks of parliamentarians have also been increased.

The soft stance on government servants and parliamentarians shows that vested interests still matter in our country even at a time when taxes have been imposed left and right on both the poor and the rich. The government did reduce the levy on petroleum products from Rs80 to Rs70 per litre, but in doing so, it slashed the development budget by Rs250 billion. This reduction shows that the development budget will continue to be adjusted downward if targeted taxes are not recovered.

The perks enhanced for parliamentarians would have a nominal fiscal impact, but it is extremely painful for ordinary people who will be fighting for survival due to a steep rise in the cost of doing business. The greed to fully utilize air travel allowances by carrying the non-utilized fund to next year is disgusting. The new taxation on the sale of property is punitive, and it is unfair to exempt only retired and serving government and military officers from this tax. We should treat all citizens equally and refrain from pampering individuals on the basis of their posts.

The withdrawal of most exemptions will bring pain for ordinary Pakistanis, but at the same time it may force numerous sectors to pay taxes that other sectors that are not enjoying exemptions have been paying for years. Besides falling into a normal tax regime, these exempted sectors will now be charging sales tax from consumers. This will substantially increase the prices of numerous daily use items that include all packaged dairy products. Though this impact will mainly be on the affluent segment of society, sales tax on confectionery and a 15 per cent tax on fruit imported from Afghanistan and other countries will drain the pockets of ordinary people. Higher taxes on fabrics and clothes will also be felt by ordinary people.

An increase in income tax rates for the salaried class will further reduce the consumable surplus of families depending on salaries. Due to an increase in the cost of living, many of these families are likely to fall from the upper middle class to the lower middle class. They will have to cut some essential expenses. Healthcare expenses are likely to go out of their hand after an increase in taxes on medical implants and medicines. Utility rates are already out of budget for every segment of society; power rates are unbearable, which are going to increase further. Affluent segments have shielded themselves from high power charges by installing solar power. The poor cannot do this, and they will end up suffering even more.

There are 40 per cent of the population that are living below the poverty line in Pakistan. They include even those that are earning the minimum wage. After July1, 2024 there will be a sudden increase in the prices of numerous daily use items, which will be unaffordable for most of them. And most people who are barely getting by will face absolute poverty. Inflation is likely to increase at least in the short term as a result of new taxation measures.