**Key Takeaways:**
– The recently passed budget primarily aims to secure an IMF deal.
– The PML-N relies heavily on civil and military bureaucracy rather than popular support.
– The salaried class bears the brunt of increased taxation, while informal sectors remain largely untaxed.
In his recent article “Death and Taxes,” published in daily Dawn, Umair Javed, a sociology professor at LUMS, provides a critical analysis of Pakistan’s newly passed budget. Javed’s insights highlight three significant aspects of the current ruling regime’s approach to economic management.
Securing the IMF Deal
Umair Javed emphasizes that the primary focus of the current budget is to secure a new agreement with the International Monetary Fund (IMF). “The entire budget exercise seems to be working backwards from whatever targets have been communicated by the lender,” he states. The IMF’s demands for raising domestic revenue have significantly shaped the budget, particularly through measures aimed at removing electricity price distortions and various tax exemptions.
Reliance on Bureaucracy and Military
The second crucial point Javed makes is about the ruling party’s reliance on civil and military bureaucracy. He argues that the PML-N’s uncertain position in power has made it more dependent on these institutions. This dependence is evident in the budget’s provisions for increasing pensions and salaries for government officers. Javed observes, “The entrenched control of the civil and military bureaucracy on financial decision-making” continues to dominate the economic landscape, reflecting a system that prioritizes its own needs over those of the general populace.
Neglect of the Salaried Class
The third aspect Javed discusses is the budget’s impact on the salaried class, which he describes as “the first to be sacrificed.” He notes that the white-collar salaried class, fully documented taxpayers, are often subjected to increased taxation to meet revenue demands. Javed comments on the broader implications, stating, “This budget has taken full advantage of this, and will further contribute to downward mobility and decreasing living standards that have been the norm for the past few years.”
Structural Economic Deficiencies
Javed also touches on the structural deficiencies in Pakistan’s economy, pointing out that the lack of productivity and the need for foreign exchange make IMF loans almost indispensable. He explains that any government, unless willing to take radical steps, would have to comply with the IMF’s conditions to secure financial support.
Protection of Core Support Base
Another significant observation is the government’s decision to protect its core support base, primarily businesses in the wholesale, retail, and other undocumented sectors. Javed notes that initial claims of tightening the noose around these groups have proven hollow. He suggests that implementing a fixed income tax regime through commercial electricity connections could have been a step towards greater documentation, but the ruling party chose to shield these sectors from stringent taxation.
Future Prospects
Looking ahead, Javed predicts that future budgets will likely resemble the current one, with ongoing economic stabilization efforts leading to “anaemic growth.” He concludes that the political landscape is expected to remain unchanged, with the regime maintained by state power rather than popular support. “It is then likely that the next few budgets will look the same as this one. No respite for the weary, with both economic death and taxes for the salaried class,” Javed asserts.
Conclusion
Umair Javed’s article provides a sobering analysis of Pakistan’s current budget and its implications. By focusing on securing an IMF deal, relying on bureaucracy and military support, and neglecting the salaried class, the government has created a financial framework that prioritizes short-term stability over long-term growth and equity.
