Economists, rights activists decry rising indirect taxes, inflation

Expressing their serious concern over high dependence on indirect taxes in the federal budget 2021-22, a group of economists, labour and women rights activists have said that it would ultimately hit hard low-income common citizens, who are already suffering on account of increased prices and unemployment.

Dr Pervaiz Tahir, Dr Aqdas Afzal and Dr Asad Sayeed spoke at a post-budget seminar organised by the Pakistan Institute of Labour Education and Research (PILER) on Wednesday. Rights activists, including PILER’s Karamat Ali, Aurat Foundation’s Mahnaz Rahman, NOW Communities’ Farhat Parveen, the Women Action Forum’s Dr Rubina Saigol, and the National Trade Union Federation’s Nasir Mansoor, also spoke.

Dr Tahir said the real income of the workers had been affected due to the increased inflation rate. Despite the fact that minimum wages for unskilled workers had been increased to Rs20,000 and there was a 10 per cent rise in the salaries of government employees, the real wages had, in fact, decreased by about 14 per cent because the average inflation rate was 17.9 per cent, he said.

He said the budget was irrelevant for the working class. “Direct taxes like income tax are only 37.4 per cent of the total revenue, whereas a major chunk of 62.6 per cent comes from the indirect tax, which is paid by the common people.”

Dr Tahir recalled that about 10 years ago a research had calculated that living wages for a common man’s family should be around Rs27,000 per month, which should have been doubled in a decade in 2021.

“The Sindh government has raised the minimum wages to Rs25,000, which is almost near the living wages calculated about 10 years ago,” he said. Dr Afzal, who is programme director and assistant professor, Social Development and Policy, at Habib University, said: “Covid-19 is a big public health crisis in the world, which has caused the worst kind of recession. This is even worse than the 1929 Great Depression.”

A large number of businesses have been closed down all over the world, and this has caused the end of millions of jobs. He said that the budget 2021-22 was neither people- friendly nor was it tax-free. “This budget is a “business as usual”.

Dr Afzal pointed out that poverty creates problems like a lack of social solidarity. Lack of trust and confidence in each other is evident from the fact that people don’t accept cheques from their fellow citizens. They mainly deal in cash. “If we look at literature, we know that poverty can increase social unrest in a society,” he added.

Dr Sayeed, who is also a member of the National Finance Commission (NFC) from Sindh, said that due to Covid-19 the GDP growth rate had reduced and the government figure of 4 per cent was incorrect. There was no growth in major industrial sectors like textile, he added.

“The government’s revenue target of Rs4.7 trillion is quite ambitious. Even three years back, the government had fixed a revenue collection target of Rs4.3 trillion, but it has never been achieved during the last three years.”

“The government has imposed new taxes on milk powder and meat, which would further escalate the inflation rate. Already, food inflation is between 16 and 20 per cent,” he added. Rahman said the poverty rate in women was more than poverty in men and the Covid-19 Pandemic had aggravated the situation.

“Covid-19 is still haunting us and the poor population is hit hard because of prolonged lockdown and closure of businesses,” she said. She underlined the need to launch an advocacy campaign for the resolution of the common people’s problems.