Anjum Ibrahim
In today’s highly politically-charged atmosphere the debate on whether the government has the authority - constitutional or moral - to present the sixth budget with 34 days remaining till the end of its tenure has assumed the status of a full blown confrontation - the budget is scheduled to be presented on 27 April while the tenure of the government ends on 31 May.
The constitution does not have any clause that binds an administration to present a budget within a specified period though the practice till the year before last (2015-16) was to announce it during the first to second week of June (with fiscal year ending on 30 June. The reason was two-fold: (i) industrial and farm output data is gathered by districts, on-sent to the provincial government which then passes it onto the Pakistan Bureau of Statistics (PBS) for compilation of national data. This entire process takes around two months, thus if the budget is presented in June then the available data would be up till end March/early April that would allow for a more realistic projection till the end of the fiscal year then if the budget was presented in April. Thus the 27 date for the budget presentation implies data available up to end February which, in turn, would render projections even more unrealistic than has been the case so far; and (ii) real time data available to the government includes actual allocations/disbursements and total revenue collected. Pakistani administrations in general and the PML-N administration in particular, have displayed a marked tendency to maintain in the budget, irrespective of the date it is presented in parliament, that the previous year’s budgeted revenue collections would be met by the end of the year citing claims by the Federal Board of Revenue (FBR) to that effect and disbursements would be as budgeted and spending above what was budgeted is noted in supplementary grants. Thus if the budget is presented on 27 April as stated by Special Advisor to the Prime Minister on Finance, Revenue and Economic Reforms Miftah Ismail then claims reflecting desired as opposed to actual/revised allocations and revenue collections would be even more pronounced than in the past.
The practice of announcing the shortfall in meeting the end of year targets by FBR was abandoned on the instruction of Ishaq Dar in 2014-15. It is however unclear whether Miftah Ismail would present a more realistic picture but given that it is an election year one would be compelled to be skeptical; thus even if Ismail himself wants to present a realistic picture he would be stopped from doing so by his party due to political considerations.
Last year, the then federal finance minister Ishaq Dar presented the budget on 26 May and the earlier date was attributed to the fact that Ramazan was to begin by end May and fasting, the administration argued, may compromise the parliamentarians capacity to engage in meaningful debate. And finance ministry sources claim that for partly for that very reason the federal government has decided on 27 April as the day of the budget presentation. In this context, it is relevant to note that while Dar selected a date that was a few days earlier than Ramazan the Abbasi-led administration has selected a date at least 17 days before the onset of Ramadan. The reason could well be that had the budget been presented say on 9 May, a week before the onset of Ramazan, criticism about an administration presenting a budget a mere three weeks before the end of its tenure would have been even more compelling.
Be that as it may, Ismail has claimed on record that he did consult with PPP and PTI parliamentarians before deciding on the date. If this is correct then those who agreed to this earlier date need to be taken to task by their party leadership.
Many economists argue that the budget 2017-18 is unlikely to be applicable for the entire year even if the PML-N government retains its hold on power for two reasons. First, a PML-N victory may not lead to the party nominating Shahid Khaqan Abbasi as its prime minister. In the event that Shahbaz Sharif succeeds in getting the position he is likely to resist pressure from Nawaz Sharif to follow Dar’s policies, as he repeatedly expressed his serious reservations against those very policies, albeit privately. And secondly, if a coalition government is at the centre, as is being projected by political pundits, then too, the budget would undergo a massive revisit. Additionally they point out, with a great degree of credibility that recent Pakistani budgets have been increasingly unrealistic and their implementability compromised almost on the first day of the start of the new fiscal year.
But it is vital to acknowledge that any concessions to any pressure group or any change in taxes that would benefit any particular group of taxpayers can be cited as pre-poll rigging by opposition parties. And undoubtedly the Abbasi-led administration can be held guilty of already engaging in such activity as the recent presidential ordinance has not only granted exemption from income tax to all those with income of 100,000 rupees or less but has also limited the highest tax rate to 15 percent. The administration therefore has targeted the large salaried class, which is known as the PTI’s support group, and its major donors, the rich – be they industrialists/businesses, large commercial concerns and service providers with lower taxes.
The charge of protecting the wealth of tax evaders, avoiders and money launderers through the amnesty scheme (defended by the government by pointing out that politically exposed persons (PEP), money launderers, drug smugglers, and terrorism financiers cannot benefit from the scheme) does stick because an amnesty scheme, by definition, asks no questions as to the source of income. There is no mention in the scheme as to what the government would do if adult children of those who belong to either of these categories barred from using the amnesty scheme, or their relatives or retainers, use the scheme on their behalf. Thus the government needs to bring greater clarity to the scheme and explain how it will determine that the scheme has been used by those disallowed from using it and if it does determine that it was used by the barred groups then what action would it take against them.
It is advisable for the government to cede to opposition demand not to present a budget for the next fiscal year as it is unlikely to be implemented, restrict itself to presenting a budget of no more than four months, desist from prioritizing political considerations that include reducing taxes, an unrealistically high development expenditure and understating the required reliance on foreign borrowing that would fund the budget; and finally there is a need to delay the budget presentation in parliament till 9 May, a week before Ramazan.
