Budget - a critique

There was never a doubt about this budget being awash with populist provisions especially in light of the fact that such tactics are the norm with democratic governments across the world, in fact they even have theories about this. Accordingly, the fanfare with which the analysts and media labelled the budget as "Election" seriously lacked imagination. A side note: dictators are spared election blues and consequently are ignorant about the mischief of an unpopular budget preceding hotly contested polls.
Frankly the budget could have been as enterprising as the Economic Survey which was presented by the same team. Perhaps cloaking known history was considered easier compared with innovatively dreaming an uncertain future.
Perchance a PPP (Public Private Partnership) budget was the solution; after all corporate managers are quite capable of preparing scenarios in the most challenging circumstances. Performing on a canvas invisible to critics would have been child's play! To elaborate, when was the last time a performance appraisal hinged on actual results varying adversely with budgeted numbers. Actual numbers don't even merit a passing comment in the press the day after the budget. If the budget is simply a constitutional formality to enable the government to spend next year, why not go all the way?
As a hypothetical example, envisaging additional exports or inward remittances could easily have provided space to increase development expenditure, spending on education and health, reducing borrowing and adding more to BISP. At this stage thinking up credible arguments was all that was needed and on the very far chance that actual results did come under scrutiny, the blame could easily be passed on either to the exporters or overseas Pakistanis for being less patriotic. Idealists and the chronic critics are advised to cursorily view budgetary proposals being considered in debt-ridden Europe and they will quickly warm up to this doctrine.
Nonetheless, the government appears to have fumbled with the opportunity since it is now too late to revisit budgetary proposals on the aforementioned lines. Even when it was spot on its proposal to assure the loyalties of the rank and file, the government was hesitant. Once more the wheel is not being reinvented; particularly one is reminded off the scene in the movie Caligula where the Emperor, having succeeded to the throne, buys the Roman legions loyalties with denarius. The only critical factor in this tactic is how much. Considering that the budget recognises that inflation will be around 11%, a 20% increase in salaries is hardly enough to have a binge. Frankly 40% would have hit the bull's eye given that ab initio there was never a risk of any opposition to such a proposal.
The rest of the populace is a different story, they are the ones who have and will forever pay for government's largesse and should rightfully tremble when they hear that there are no new taxes!
On the face of it, the income tax proposals appear to be beneficial and mostly relate to enhancing exemptions and incentives and reducing rates. The anomaly is that direct tax collection is estimated to increase by 28% when projected GDP growth is around 4.3%. Reading the fine print clears the air and dizziness sets in. The legislators propose to outsource all powers to the tax authorities, short of summary execution. In a nut shell, the assessing authorities can now, determine the cost of any asset irrespective of what was actually paid; determine the consideration received on disposal of such asset irrespective of what it was actually sold for; make any enquiries deemed necessary and accordingly determine taxes necessary to meet budgetary targets against all of which the taxpayers only window for hope in the form of judicial assistance has almost been eliminated.
An analysis of last year's increase in income tax collection should identify the on ground realities, simply, of the amount collected, what is the percentage under dispute and appeals?
Sales tax collection is shrouded in a more complicated mystery. They are projected to increase by 33% and the budgetary provisions are at best elusive on how. Maybe something was missed while scanning the proposal; nonetheless such taxes are in any case contra indicative for growth. Consider the equation that the upper echelon of society are provided subsidies on power which are financed through sales tax collections from general populace, including those struggling below the poverty line!
There should be no expectation that the landed aristocracy in the corridors of power will come to the aid of business especially when they are busy celebrating. But seriously, demanding taxes on agriculture is irrational for business. Such taxes will only increase the cost of sustenance, baring the cockamamie assumption that landlords will absorb the additional taxes, thereby increasing minimum wage.
Criticising defence spending is also preposterous. Drawing room discussions based on faulty regional perceptions fuelled by media projection are at best a passing fancy and at worst conspiratorial. The fundamental decision is whether or not the country needs an army. Considering the geographical location of Pakistan, until a new technology can facilitate relocation to somewhere in the Pacific, the answer is a resounding affirmative. Beyond that the nation needs to provide funds to ensure freedom at whatever cost including extreme austerity. There are no half measures; guns without bullets don't win wars. Either go all the way or accept servitude.
The minuscule increase in custom collection is surprising. A country struggling to balance its foreign currency flows, having already utilised its three wishes in the form of inward remittance, seriously needed an all out review of its imported wants. The country can ill afford negative cross border trade irrespective of all the hype created around customer choice. The pundits were wrong, what has happened to the West evidences that consumers don't know what is good for them!
It would be extremely beneficial if the government and opposition can revisit imports with a miserly perspective. Targeted subsidies for the poor masses should be the norm. The budget has made provision for subsidies and there was some mention about food subsidy for the poor through USC however unfortunately here is where election year mischief will be at its prime. There are ways and means to intelligently use this fiscal space other than increasing circular debt or taking losses on wheat support. What is needed is conviction and vision.
Finally, absence of further incentives for manufacturing was disheartening, the key word being further. If previous legislation has been unable to incite investment than either its implementation is faulty or the government needs to offer more. As blatantly evident, Germany's manufacturing strength is the secret of its success. Notwithstanding, the purely personal perspective and views hardly matter and life will go on. So next week the plan is to revert back to and complete the Theory of Profit.