About two years before elections, it was understandable on the part of PM Imran Khan to have cold feet about implementing the commitments made to the IMF by former Finance Minister Hafeez Sheikh. Under New Finance Minister Shaukat Tarin there is a talk now to achieve some of the agreed targets while trying to negotiate others with the Fund. The all too familiar scenario for successive governments in the past has been to implement a painful adjustment for one to three years, then switch to election mode and spend heavily to try and shore up their electoral prospects, a move that again depletes the reserves and increases deficits. Are we seeing a repeat of that or witnessing something new?
The FBR faces an uphill task of achieving the revenue target of Rs 5,963 billion fixed by the IMF. Tarin’s promise not to increase the taxes for the salaried class and not to further burden those already in the tax net would be widely welcomed. We are being assured that the revenue target would be achieved through broadening of tax base with the help of innovation and technology. There are large chunks of the population who remain untaxed on account of their political clout. Former Chairman FBR Shabbar Zaidi tried to use some of the innovative techniques to bring the bulk of the trading community into tax net but failed. A similar case is that of the so-called progressive farmers using modern methods of irrigation, cultivation, and preserving the crops. As the provincial assemblies are under their control, they continue to dodge income tax. Similarly, parliamentarians and ministers who spend tens of millions of rupees to get elected pay only nominal taxes. Hopefully Mr Tarin will make them cough up what they owe the state
A little earlier SAPM Tabish Gauhar had maintained categorically that power tariff hikes are inevitable in order to control the circular debt. Early this month Nepra was reported to have raised power tariff yet again. Finance Minister Tarin however has promised to convince the IMF to show a lenient attitude as he had an alternate strategy to tackle the rising monster of circular debt. Mr Tarin would deserve the highest national award if he can bring down circular debt without raising power charges.
