Govt vows to collect more taxes, slash expenditure
June 12 2019 01:22 AM
Hammad Azhar
Pakistan Minister of State for Revenues Hammad Azhar speaks as he presents the budget for the year 2019-20 in the National Assembly, in Islamabad yesterday.

AFP/ Islamabad

Pakistan Prime Minister Imran Khan’s government vowed to collect more taxes and make cuts in spending in a closely watched budget presented to parliament yesterday, weeks after reaching a deal with the IMF for a $6bn bailout.
Before a rowdy parliamentary session, the government announced plans to slash civil expenditure and freeze military spending while promising to substantially raise revenues to stem a yawning fiscal deficit, as it pledged to collect Rs5.5trn ($36bn) in taxes.
“We have slashed the civil budget by 5% while the military budget will remain the same,” said Hammad Azhar, minister of state for revenue, as he announced the details of the plan.
“The financial year 2019-2020 will be a year for economic stability. We will make some tough decisions and will try to save the poor public from the effects of those tough decisions,” he added.
Azhar went on to highlight a range of new taxes and increases in existing levies in the new budget, saying raising revenues was pivotal to stabilising the country’s economy.
“As long as we do not improve our tax system Pakistan cannot prosper,” said Azhar.
Pakistan has struggled for decades to collect taxes with estimates suggesting that only around 1% of the 200mn strong population filed a return in 2018.
Ahead of the budget presentation, Khan took to the country’s airways on Monday for the second time in recent weeks to plead with Pakistanis to declare their assets in the latest scheme aimed at increasing tax 
The budget session was dominated by a vocal opposition following a string of arrests of their leaders this week, with members of the Pakistan People’s Party and Pakistan Muslim League – Nawaz chanting throughout the proceedings, drowning out Azhar. 
The presentation of Khan’s first budget comes just a day after the government released the latest round of bleak economic figures for the cash-strapped country, showing growth for the current fiscal year falling to 3.3% - well below the 6.2% target.
Discontent is simmering in Pakistan following repeated devaluations of the rupee, soaring inflation, and increasing 
utility costs. 
The economic pain follows months of failed efforts by Khan’s administration to stave off ballooning fiscal and balance of payments deficits, along with low tax yields and mounting debt. 
The agreement eked out with the IMF still needs final approval by the fund’s board, and it is widely believed the body was waiting to see details of the budget before giving the final sign-off.
Analysts have warned the IMF deal would likely come with myriad restrictions that could bridle Khan’s grand promises to build an Islamic welfare state, as the country is forced to tighten its purse strings.
Pakistan’s increasing economic woes also come as the country is facing possible sanctions from the Financial Action Task Force - a money-laundering monitor based in Paris - for failing to rein in terror financing.
The organisation will decide soon whether to add Pakistan to a blacklist that would trigger automatic sanctions, further weakening an already-faltering economy.
To add to its troubles, the United States has warned it will be watching closely to ensure Pakistan does not use IMF money to repay debts to China, which has poured billions into the country for infrastructure projects under its Belt and Road Initiative.

Last updated: June 12 2019 01:22 AM

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