LAHORE: In a fact sheet released on Wednesday, the Institute for Policy Reforms (IPR) questioned the objective of the mini budget claimed by the government. It said the revenue generation steps were announced to cover the shortfall of Rs40 billion in the Federal Board of Revenue (FBR) collection target.
The fact sheet noted that this was a pre-condition to be fulfilled before the release of the next IMF tranche but it was tilting the tax system even more towards indirect taxes which already accounted for over two-thirds of FBR revenues.
The fact sheet further raised questions including whether this was a precursor of more mini budgets in 2015-16 like last year.
The IPR fact sheet added that the focus instead should have been on greater austerity in expenditure, especially in non-salary heads, and/or mobilising additional revenues from direct taxes.
A press release issued by IPR said, “In its first budget of 2103-14, the PML-N government promised to make a 30 per cent cut in non-salary expenditure, equivalent to Rs40bn. This was not achieved and instead there was an increase of Rs25bn. It is vital that at this time when the budget of 2015-16 already contains heavy additional taxation of over Rs200bn that the emphasis be shifted to reducing non-development expenditure. Otherwise, the growth process in the economy will be adversely affected.”
IPR added that the other option was to collect more from direct taxes and ensure that the incremental tax burden was progressive.