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Pakistan Budget 2009-10: We missed everything again

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Majority of the Pakistanis were dejected after hearing the budget speech on the evening of June 13, 2009. Not because there was no relief for the poor section of society. This was not expected by anybody from a government dealing with war time economy. The real cause of disappointment was demonstration of lack of will to tax the rich – especially the absentee landlords.

The government failed to outline any measures for revival of ailing economy. All the taxation proposals show that the poor will have to face more miseries. On the contrary, the rich and the mighty have again managed to escape taxation on their colossal income and wealth. The gigantic bureaucratic apparatus – epitome of bad governance – is given 15% pay raise but not a single step is made to curtail their monstrous wasteful expenditure and monetize all their perquisites and benefits received in kind.

The analyses done by independent economists and observers reveal that the government of Pakistan People’s Party (PPP) has failed to meet the economic challenges of the day in its second budget. Is it the budget of PPP-once a social-democratic party? Certainly not, it is, in fact, as economist Nadeemul Haque aptly said, “the 10th Citibank budget and the 64th bureaucrat-controlled budget and what do we get? Same old! Same old! Same old”

What should have budget 2009-10 been like? This question was never discussed by the elected government inside or outside the parliament. Resultantly, the annual budget, as usual was prepared in the same old mould – bureaucratic-controlled, IMF-sponsored and pro-rich.

Nobody has realised, while preparing this important document, that at this juncture of history, Pakistan needs class stability to avoid chaos, civic strife, lawlessness and religious obscurantism. The tragedy of 2.5 million Internally Displaced Persons (IDPs), burgeoning debt servicing, increased military budget, high inflation, unjust tax system, wasteful expenses, industrial slowdown, recession, State inefficiency and bad governance pose serious challenges to our economic survival.

But, in the budget no serious efforts are outlined to meet these challenges – the budget-makers were more interested to balance their books through foreign and domestic borrowings. What else could one expect from a banker trained by Citi Bank? But the question is where the stalwarts of PPP were. People like Chaudhry Manzoor Ahmad and Sardar Asif Ahmad Ali, who are known champions of pro-poor socialist economic policies.

Sadly, budget 2009-10 provides only Rs 31.6 billion for education and merely Rs 6.4 billion for health. Can this be called a pro-poor budget? The burden of indirect taxes, constituting nearly 70% of total taxes, stands shifted to the poor, yet, PPP claims it has pro-poor economic policies. Have PPP stalwarts studied the model of greater social mobility in the Nordic countries? Have they bothered to adopt their tax and welfare systems? The systems of these countries, unlike that of America which we follow with pride, deliberately try to help the children of the poor to do better than their parents. This is what pro-poor polices imply.

It is more than obvious that Budget 2009-10, is totally oblivious of redistributive fiscal policies and social welfare programmes for social mobility. Our poor have been given a so-called “economic relief package” by way of mercy – Benazir Income Support Programme. The relief (sic) is only of cosmetic nature and there is nothing in the policies or budget that aims at helping the poor to move upwards. Education remains at the lowest level of priority in our state policies.

The federal and provincial governments not only allocate meager amounts for this sector but also do not know how within given resources through innovative means they can revamp the entire system to become effective tool for social mobility. There is a complete lack of understanding of this issue by the rulers and the result is that poor segments of society are condemned to remain mired in abject poverty and their children have no chance to move up as education is either not available to them or is of no practical use.

Thus, by all standards, budget 2009-2010 is yet another routine exercise of balancing the books (that too by domestic and foreign borrowings). Pakistan needs meaningful redistribution policies that specifically benefit those at the bottom. There is nothing in this budget towards achieving this goal. It is, as usual, a disappointing document-prepared by bureaucrats at the behest of the rich classes for the perpetuation of an exploitative economic system.

(The writers are tax lawyers and authors of many books on Pakistani tax laws.)


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