It is futile to complain, as National Assembly Leasder of Opposition Shahbaz Sharif has done, that there is not a single measure of relief for the poverty-stricken Pakistanis in the mini-budget. The mini-budget is aimed at raising more funds to comply with the IMF’s conditions rather than providing relief to those who badly need it. The business class by and large sits cosy, with some maintaining that the mini budget would help stabilize economic growth. While the government withdrew the Rs343 billion sales tax exemptions that will affect every segment of society, it has proposed income tax exemption to the richest who own real estate investment trusts (REITs).
Finance Minister ShaukatTarin has conceded that the levy of a 17 percent sales tax on some specific items would raise Rs2 billion, adding that the tax on these items only would affect the ordinary people. This means most of the population. Every food item which is packed will be taxed. This would force ordinary people to go for unpacked milk, curd, salt and chilli powder, providing a bonanza to unscrupulous elements who specialize in selling adulterated and unhygienic items. The middle class will be further squeezed with a whopping 17 percent GST imposed on infant formula milk, dry milk, yoghurt, bread, buns as well as laptops, and personal computers. While the consumer price index (CPI) might not be impacted much, the sales tax would reduce the purchasing power of middle class individuals buying a new car (over 850cc), mobile phones and solar panels.
The State Bank of Pakistan Bill was also vehemently opposed in the National Assembly as a sovereign capitulation. It was maintained that the Government was handing over the control of the SBP to the IMF which would rule Pakistan like another East India Company. While questions were raised about the independence being provided to the SBP Governor, the real bone of contention was his nomination by the IMF along with certain amendments in the SBP Act which would strip the central bank of an inherent mandate of helping the government respond to emergency situations, such as Covid-19, or support for initiatives such as low-cost housing or export refinance. Many think that the IMF-proposed amendments to the SBP Act agreed by the government are misplaced and excessively intrusive.
