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Thoughts on the Budget 2020: What was good and what was bad for the people - Digital News

The Pakistan Tehreek-e-Insaf (PTI) government presented its second budget. It is a common practice in Pakistan for governments to throw debris at past governments to cover up their mistakes or shortcomings, but this time the government had the support of the opposition as well as Corona.

The government said how badly the Corona Virus has affected the economy, meaning that if Pakistan did not suffer from the disease, everything would be fine, everything would be great, everything would be unique.

What is special about this budget is that the government and its supporters never see anything bad in it, while the opposition and its supporters never see anything good in it.

Another major problem of this budget is that the people for whom this whole gathering has been organized do not understand anything. Everyone is asking each other, "Brother, tell me what happened."

Understanding this concern and difficulty, we tried to understand in general terms from some of the journalists who understand and report on economic issues what is good and what is bad for the people in this budget.

Hopefully, something will be easier to understand.

One of the three positive aspects of this budget is that the term capital gains tax on property has been extended to 4 years and its rate has been reduced. The fact of the matter is that the real estate sector runs the whole of Pakistan. If it works, it will run 40 industries, and in the current situation, only this sector can get us out of the crisis.

Another positive aspect is that Rs 12 billion has been allocated for development projects in the agricultural sector. After the 18th Amendment, work in this regard came to a complete halt, which also affected agricultural production. But now it is hoped that these projects will go a long way in boosting production.

Then Rs 81 billion has been allocated for water resources. It may be recalled that other major water projects including Mohmand Dam are underway in Pakistan. Most governments are less interested in long-term plans and want immediate returns. But the good thing about this government is that money has been allocated for these big projects.

In addition, the reduction of customs duty on raw materials is a major decision. There was a strange situation that there was an additional customs duty on items that did not have a customs duty, but now the government has abolished this additional customs duty, after which it is hoped that the industrial sector will flourish. ۔

On the downside, less money has been allocated for public development projects, even though they have boosted the economy. Now that the government has set a production target of 2.1 percent, its achievement may be affected and even 1.2 percent will not be achieved as the government's own expenditure is very low.

It is government spending that drives the private sector. Measures regarding checks and traces have not been heard in sugar, cigarettes, and beverages and other such industries as tax evasion has been reported in these sectors. If steps are taken in this regard, tax revenue can be increased as new taxes have not been imposed by the government.

A third downside is that various incentives should have been announced to encourage local Pakistanis who want to invest in new industries, as well as to accelerate the privatization process. Although this process can help a lot in economic recovery.

Initially, the things I saw were mixed. For example, subsidies to various sectors have been drastically reduced. About 48% of the subsidies are being reduced. It does not involve a single sector, but the effects as a whole will be seen.

One downside is that the petrol levy has increased by more than 70%. This means that the government will continue to take more money from the people throughout the year.

Then the development budget has been kept low, on the other hand, the defense budget has been slightly increased. In the case of taxes, the burden on the people has not been increased, but salaries and pensions have not been increased, so the overall income will be reduced. This time the share of the provinces in revenue has also been reduced which will also reduce the resources of the provinces.

No new taxes have been imposed in the budget, but the Federal Board of Revenue's (FBR) target has been increased by 25%. It seems that the FBR will not be able to achieve this goal, but the situation will not be clear until the Finance Act is passed. One thing is for sure in this regard, if the FBR target is maintained, it is quite possible that some kind of secret taxes has been kept, but over time this situation will become clear.

Secondly, the announcement of the condition of the National Identity Card on the purchase of one lakh instead of 50 thousand is a positive step. The positive side here is that traders do business with unregistered people, now when they take someone's ID card, you get a list of unregistered people.

Suppose a retailer comes to a wholesaler and buys goods worth Rs 5 lakh from him. Now if he is unregistered, the FBR will catch him. The board will say that you have made a purchase of Rs. 5 lakhs, your annual turnover is about Rs. 60 lakhs. Are tax registered? This means that such people will be identified. On the other hand, the wholesaler is facing the problem that when he asks for an ID card, his customer goes to another shop. That is why the merchants were making so little money.

The third point is that the duty on raw materials has been abolished. That is, now that the duty on raw materials has been abolished, the prices of manufactured products will also come down, which will directly benefit the people. Similarly, in the case of exports, the advantage will be that due to the low price, we can compete with the world in the world market in a very good way.

Pensions and salaries have not been increased in this budget, even if there was no increase in salaries, at least the pension should have been increased because they have no other source of income.

The government has given relief on turnover only to the hotel industry but it should have been included in the scope of all industries that pay turnover tax.

Turnover can be understood in simple language as a set of annual sales limit in various industries, to the extent that the government collects 0.5% or even 1% tax from any industry that sells products. Now that the Corona Virus has severely affected the hotel industry as well as other industries, the government should have provided this relief to other industries as well.

Last year they did very well, for example, there were many different products, including clothing, which were declared a luxury item. Duty is levied on luxury items to prevent imports. However, things get a little different, for example, you know that consumers prefer Chinese-made fabrics over locally made ones, so when the government increased the duty, all these items were exported from Afghanistan to Pakistan. They started coming through smuggling, so the FBR suffered 2 losses.

On the one hand, the imposition of regulatory duty reduced imports, which led to a reduction in taxes, and on the other hand, the stock of these items reached the market unintentionally, so this time the duty was reduced. The purpose of this reduction is to ensure that imports continue in a legal manner and that revenue continues to flow.

Very little money has been allocated for education this time, which is a negative aspect of this budget. It is also a painful process in the sense that before Imran Khan came to power, he used to talk about increasing the budget for education, but this does not seem to be the case.

It has been announced in the budget speech that more than 100% tax has been levied on educational institutions that charge high fees. Details are yet to come, but if it is applied to technology and professional training institutions, it will only hurt. On the other hand, even if primary or secondary level educational institutions that charge high fees are taxed, these institutions will add the tax amount to the fees, which will increase the burden of fees on parents.

Pakistan has been allowed to make mobile phones which is a good move. There should also be a reduction in sales tax on mobile phones made in Pakistan. Various incentives should also be given to promote the industry and standard mobile phones should be brought in the market. Work should also be done on the promotion of Dust Clean Lab and assembling units for other standard electronic devices such as TVs etc. besides mobile phones.

As far as the negative aspects of the budget are concerned, the 27 points given to Pakistan by the FATF have not been implemented. The government maintains that it has completed the implementation of 14 points, with 13 still remaining. This is disturbing because the FATF had said that all the deadlines given to Pakistan have expired, but still another opportunity was given. Therefore, it can be said that Pakistan may face difficulties in the next review.

The rate of GST on caffeinated beverages has been increased from 13% to 25% which is a good move. The Ministry of Health should impose more stringent restrictions in this regard. On the other hand, the import rate of cigarettes has been increased from 65% to 100%. This measure does not seem right because you have already increased the tax which has led to an increase in black marketing and smuggling of cigarettes. The FBR and customs confiscate a large number of cigarettes, but the same cigarettes are returned to the markets and are not lost.

Another problem here is that the manufacturers of local brand cigarettes do not pay any tax to the government and in this field, the government can get about Rs 40 billion in revenue which is lost due to smuggling. Therefore, steps should have been taken to regulate these issues.

One of the most important aspects of the current budget is the negative growth rate of Pakistan. Right now, the government is announcing that the growth rate will be negative 0.5 percent in the current year, while the budget for the next financial year will try to bring it to 2.1 percent.

In Pakistan, because the infrastructure, education system is very weak, a 2.1% growth rate is not good for Pakistan in any way. The government should have taken steps to increase it, for which the government should have given a huge development package which would have been at least a thousand billion, but no such package is seen, even for development only 650 dollars. Have been placed. Now if it is calculated in dollars, it decreases in the same way.

In addition, the budget deficit could rise sharply. If we talk about agriculture, Rs 10 billion has been allocated for the eradication of locusts, which seems to be very low because the farmers have suffered a lot due to locusts who have to be given relief. However, there is nothing in the budget in this regard. Not found

An important point of this budget is not to increase the salaries and pensions of government employees. So now we have to see how the government will be able to satisfy the government employees as Pakistan has been experiencing very high inflation for the last two years. Inflation was 14 percent in January, and real incomes are falling by the same rate.

Now, if the salaries of government employees are not increased, the amount spent on the market will be greatly reduced and thus the business activities already infected with the Corona Virus will be further reduced as people will have no money to spend.

This time Rs 1280 billion has been allocated for the defense budget. Earlier, the defense budget was Rs 1,250. The current situation in our region is extremely tense, tensions are rising between China and India and the situation on the Line of Control is not good. On the other hand, India is constantly increasing its naval strength. Was not so visible.

In addition, no increase in the salaries of the armed forces has been announced along with the reduction in the defense budget. This is also a big class with government employees, the government needs to think about it. In dollar terms, the defense budget has been reduced rather than increased. Low defense budgets can affect various defense issues, as defense often involves long-term plans and high costs.

Before I start, let me say that there are many question marks on this budget, but I understand that the situation that is being described cannot last long, and very soon a mini-budget will be given to this government. Will have to bring

Therefore, no definite opinion can be given about the good things that are being mentioned.

But yes, I think there are a lot of flaws in this budget, some of which I want to point out. The first of the three biggest problems in this budget is the tax collection target, which is 28% higher than last year's tax collection.

Given Pakistan's economic situation, the chances of achieving this goal are slim, so I fear a mini-budget, because, without it, I would not have been able to do so.

The second problem is that there has been a lot of talk in the PTI government but the country's agricultural sector has been neglected. This is not the first time that the previous governments have done the same, but this government has not decided to change it.

But despite this bad attitude, we can see that compared to other sectors, only the agricultural sector saw a positive output. Therefore, it is time to increase production in agriculture in any case, because, God willing, if it does not happen, it will have the worst effects on the whole country, because agriculture is the sector that meets our food needs. If God willing, we have problems here, the situation could get much worse.

Number three is that Pakistan's economy and the situation in Pakistan are at a point where no single party or government can control it, and a big gap is that Imran Khan is currently out of the opposition. Instead of talking, they are bent on fighting.

Before coming to power, the people hoped that after accountability, a new atmosphere would be created in the country, which would improve the lives of the common people and provide them with a corruption-free environment and system, but unfortunately No action was taken and accountability was limited to the opposition.

Therefore, from a political point of view, in this tense political environment, there is not much possibility of talking about taking everyone along for the national interest.

Thoughts on the Budget 2020: What was good and what was bad for the people - Digital News

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