Budget and politics

FINANCE MINISTER Muhammad Aurangzeb on Thursday expressed his ‘resolve’ to increase Pakistan’s tax-to-GDP ratio to 13pc in the next three years. Addressing a post-budget media briefing, he said: “Our basic principle while framing this budget was to expand the tax base.” Given this statement and his earlier declaration at the launch of the Economic Survey that “countries cannot be run on charity but taxes”, it was expected that the new budget would have significant measures to broaden the tax base. The reality of the taxation measures announced by him in the budget, however, does not match his rhetoric. Before we delve into the reasons for this gap, it should be acknowledged that the budget does propose the revocation of certain tax exemptions being enjoyed by certain privileged sectors of the economy. That, though, has been done to raise the annual tax collection to Rs12b.97tr, a sine qua non to qualify for the three-year Extended Fund Facility being sought from the IMF.