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June 4, 2015

How should be the budget of 2015-2016?


June 4, 2015

(Former KP finance minister)
Finance Minister Ishaq Dar will present the budget of 2015-2016 on 5th June. What type of budget it should be? What should be our priorities? What steps should be taken to stabilise the economy and for gaining self-sufficiency?
Every Pakistani wants to know the answer to these questions. That’s why it is necessary for us that we should keep in mind our economy background and take the following measures.
i) Growth rate of economy should be fixed at 7% (minimum) per year.
ii) To achieve this target, the growth rate in agriculture and industrial sector should be according to the target.
iii) National revenue should be increased up to Rs1.5 billion (minimum) so that we do not have to take loans for budget deficit.
iv) Unnecessary imports must to be decreased and exports must be increased, so that our deficit in international trade can be minimised.
For the achievement of these objectives first of all we have to change our style of governing the country. We have to decide the matters with the consultation of real candidates of people instead of the persons exercising their personal liking and disliking.
Justice cannot be upheld without the rule of merit. In the budget of 2015-2016 we must try to achieve self-sufficiency. This year we have to spend a large amount of revenue for the installments of interest. If we use taxation policy as a financial tool then we can transfer financial sources to poor people. But under the present policy 88% of direct taxes are collected through withholding tax. Only 12% are received through enforcement or assessment. Sales tax, custom duty and excise duty are also with it. There are also some indirect taxes.
The imposition of all these taxes shows that government does not have any interest in mitigating the miseries of poor.
The government has all the necessary details of well off people. For example: government has the data about the education of their children in expensive

institutions, medical treatment in expensive hospitals, utility bills and bills of different clubs.
This is the only road map through which we cannot only meet our needs but also can offer the responsibility of helping the poor and needy. Every type of income more than 6 lac per year should be brought into the tax net.
Instead of withholding tax, the method of audit should be adopted. Taxpayers should be given complete awareness of system. All rules and regulations should be made easy and simple. Complains should be addressed and accountability system should also be strengthened.
In 1996, a tax system according to VAT method was introduced. Its basic object was to bring the economy in written form instead of using it for increasing the revenue. We had to depend on income tax for revenue if the economy had transformed in written form. But this scheme remained unsuccessful.
The direct taxes cannot be collected fairly if the economy is not documented, and if we’ll continue to depend on these direct taxes, the taxation system cannot be transparent. It is our suggestion that 5% tax should be imposed on each supply within the country and on all imports.
In Thailand and Singapore sales tax is 7%. In Indonesia it is 10% and in Sri Lanka it is 12%.We should resolve the energy crisis immediately. Now because of line losses and corruption not only the short-term debts increase but people have to face severe load-shedding. The industrial and agricultural production is decreasing because of this crisis. Now our distribution and communication system is working with 70% capacity. Old cables, useless conductors and corruption are also affecting the case.
According to experts these matters can be made better by good governance. If the government has a political will then the present capacity of system can be increased by more than 2,000MW, without a huge investment. The government has only to control line losses and corruption.
At the same time at least 15% of the budget should be allocated for new power projects. First priority should be power generation with water and second priority should be power generation with coal, solar and wind.
All these resources are available at local base. Agriculture sector (especially crops) are in severe crisis since previous year. Livestock is also not in a good shape. In agriculture sector almost 87% farmers have a very low income. They do not have the facility to store their produce. The Govt should fix the support prices of all-important agricultural items and ensure the sale of these items on fixed rates in the market before the destruction of these farmers due to crisis, as practised in India. Moreover tax on fertilizers, pesticides and machinery should be abolished. Flat rate bills should be received on agricultural tube wells. Farmers should be given interest free loans.
JI is ready to prepare a model according to rules accepted by State Bank for Govt. JI is also ready to present its services as a facilitator. More funds should be allocated for agricultural research so that average production can be increased by using modern technology, and extra produce can be exported.
Government should settle the matter of agricultural tax with the consultation of different organisations of farmers. Stock Markets, Real Estates, Constructors and Developers should also be brought into tax net. Another important aspect that should be kept in view in the budget of 2015-2016 is privatisation. In 2013 government signed an agreement with IMF and assured to achieve 534 million dollars through privatisation up to 30 June 2014. The fulfillment of this agreement is being assured in the coming year.
It is important to note that from 1991-2011, 167 transactions were made and 467.421 billions rupees were received. 67% was received by Federal government, 26% for the shareholders of related departments, 5% for golden shake hand of employees and 2% for the expenditures of privatisation.
Different allegations were leveled against the persons who carried out this process of privatisation. In spite of privatisation of different departments, growth rate could not increase and loans were not paid.
Before starting the new privatisation, Govt should have an analysis of the results of the privatisation by an impartial national commission.Next privatisation process should be started with the consultation of political parties. The institutions that are necessary for the state should never be privatised, and a strategy should be adopted to make them profitable.
Our economy will always be deprived of the services of experts if we’ll not develop human resources. Now less than 2% of GDP is being spent on education and health and it is a major setback to progress. In the budget of 2015-2016, 4%-6% of GDP should be allocated for every sector (health, education). Same education system and in our national language should be ensured. A large number of technical schools should be opened in the country, where education of automobile, electricity and electronics should be taught. Interest free loans should be provided to the students for establishing their own business.
Salaries of Govt employees should be increased up to 15%. It is our demand that Rs15,000 should be fixed as the pay of a worker. All Govt employees should have equal salaries and allowances instead of special allowances for special institutions. Medical and conveyance allowances should be increased up to 200%. The old 50% formula of pension and commutation should be restored. The scheme of move-over and selection grades of govt employees should also be restored.
Interest system should be abolished in the country. The State Bank of Pakistan has issued instructions and methods of interest free system in detail. Govt should start it at least from there so that we’ll be able to save ourselves from the disobedience of Allah Almighty and the Holy Prophet (SAW).
Another issue is that of NFC Award. Govt has established NFC Commission. In seventh NFC Award the formula of the division of sources among Federation and provinces should be maintained at all costs.
The Federation should not play a game to restore the position before 7th NFC Award with the help of Punjab. All efforts to turn the surplus of provinces to Federation should come to an end, for future. China Pakistan Economic Corridor (CPEC) is an important project, and if above-mentioned suggestions are acted upon fully, there will be no need to ask for loans from IMF and World Bank and our nation will achieve self-sufficiency and real independence.

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