Minister defends budget as Asif, ex-PMLN leaders assail it

ISLAMABAD: Former prime minister Shahid Khaqan Abbasi and ex-finance minister Miftah Ismail termed the federal budget for the fiscal year 2024-25 the worst-ever budget ever passed, demanded the government revise the budget, and suggested reduction in the government expenditures, instead of taxing people further.

“This budget and the economy cannot go together, as either the country’s economy will survive or this budget. What kind of government are we running? Do we think we will not reduce our expenditures and continue putting more burden on people?” he said while addressing a press conference, along with Miftah Ismail, here on Monday.

Shahid Khaqan also announce launch of his political party on July 6. He said the ally parties of the coalition government were also part of what is happening. “It is the elite who protect themselves and their friends. Whether those who impose taxes on people in the country should not be taxed themselves. There is still time to sit down and review the issues,” he said.

The former premier said the state of the country today is that 25 per cent of GDP makes the government expenditures; out of Rs30,000 billion, Rs500 billion is kept for development schemes of parliamentarians, taxpayers are bearing the biggest burden and all the burden has been put on the salaried class.

He said taxes on people are increasing by 25pc, for some by 40pc, and for some by 50pc. “Taxes are being collected from the public on the income of the government. Milk, a baby food, has also been taxed, medical equipment, charitable hospitals were also taxed. How will the economy move forward in these conditions?” he asked.

He said that taking loans at 20-22pc interest rate would put more burden on people. “The interest on loans has reached from Rs1500 billion to Rs10,000 billion in six years, and the biggest expenditure of Pakistan today is the interest on loans. The governments will spend Rs30,000 billion, and one third of it, Rs10,000 billion, is interest,” he added.

Shahid Khaqan said the government would increase its expenditures by 25pc. He said the government should start from itself by reducing its expenditures. “The government takes a loan, and distributes Rs500 billion among the MNAs and MPs, and one-third of the money would go to corruption,” he said.

He said if they stop smuggling of diesel and LPG, and collect tax on it, there would be no need to collect any other tax. Shahid Khaqan said tax was imposed on sale of land, but exemptions were given to serving and retired military and civilian bureaucrats. “Only salaried class will pay 45pc tax, and even a non-filer will not pay tax at this rate,” he added. “The finance minister should explain why is only the salaried class being oppressed,” he asked. He said the IMF had asked for Rs20 per litre levy on oil, but it was reduced to Rs10.

The former PM said cigarettes are stolen openly. But the government authorities are so weak that they could not collect tax from cigarette manufacturers. He said when FATA was merged through a constitutional amendment in 2018, the industries there were given a 5-year tax exemption, so that they could organise themselves. He said there was an impression that the industries there are of no use for people of FATA, but it was wrong as there are powerful people and outsiders have set up industries there. Today they have blackmailed the government and obtained exemptions.

Miftah Ismail said the measures that the IMF had asked for were exempted. “The IMF did not say that you should increase your expenses; you could have brought Rs3,000 billion rupees by reducing expenses, which you did not do,” he said.

He said the IMF did not ask to exploit the salaried class. It asked for imposing tax on agriculture and real estate, but exemptions were given to them. “The IMF did not say to approve development schemes of Rs500 billion for parliamentarians, and the IMF did not restrain the government from taking action over smuggling of petrol and diesel from Iran,” he said.

In reply to a question, Shahid Khaqan said he had no issue with the PMLN, but he did not agree with the style of politics of the party. Later on, reacting sharply to the presser, Information Minister Atta Tarar held Miftah Ismail responsible for high inflation during his previous stint as the finance minister.

Replying to their allegations and criticism, he said the government reduced its expenses as much as it could. “Two of our former colleagues presented false statistics,” he said, adding that Rs500 billion were not given to MNAs for development. He said it seemed Shahid Khaqan Abbasi and Miftah Ismail had not read the budget document, but started criticising it.

The minister claimed that PM Shehbaz Sharif and his cabinet members neither drew salaries nor enjoy any privileges. Highlighting the government’s economic measures, he said inflation had reduced to 11pc from 38pc in one year.

However, Defence Minister Khawaja Muhammad Asif also criticised the federal government budget, prepared in consultation with the IMF. Speaking in Geo News programme, Capital Talk, on Monday, he said tax had been imposed on exporters due to the IMF pressure, which would benefit the FBR corrupt mafia. He declared the IMF dangerous for Pakistan’s sovereignty.

On the other hand, after easing for the past five months, country’s headline inflation accelerated to 12.57pc in June 2024, up from 11.8pc of the previous month. This increase, though marking the lowest reading since February 2022, has reignited criticism of the government due to recent hikes in power tariffs and taxes that are expected to further drive up prices.

The average Consumer Price Index (CPI) for the full fiscal year 2024 stood at 23.41pc, a decrease from 29.18pc in FY23, but still above the government’s target of 21pc, the Pakistan Bureau of Statistics (PBS) reported on Monday. June’s inflation is significantly lower than the multi-decade high of 38pc recorded in May 2023. However, the SBP anticipates further inflationary pressures in the near term due to the recent hikes in power tariffs and taxes.

Last month, in an unexpected move, the SBP lowered its discount rate by 150 basis points to 20.5pc — the first reduction in four years. However, this monetary easing has done little to alleviate the financial burden on the general public and businesses, who are feeling the pinch of increased costs and higher taxes.

As per the PBS, prices rebounded for food and non-alcoholic beverages, increasing 1pc compared to a 0.2pc decline in May 2024. Housing and utilities prices accelerated to 35.3pc from 33pc. Prices for transportation remained unchanged at 10.4pc. Conversely, prices eased for clothing and footwear, which dropped to 17.8pc from 18pc, and for restaurants and hotels, which decreased to 11.9pc from 13.7pc.

On a month-on-month basis, the CPI decreased to 0.5pc in June 2024, compared to a decrease of 3.2pc in May and a decrease of 0.3pc in June 2023. Furthermore, core inflation, which excludes food and energy costs, moderated to 12.2pc in June 2024 from 12.3pc in previous month and 18.5pc in June 2023.

In urban areas, inflation increased to 14.9pc from the previous month’s 14.3pc and the corresponding month last year’s 27.3pc. Rural inflation increased to 9.3pc from 8.2pc in previous month and 32.4pc in June 2023.

The Wholesale Price Index (WPI), indicating producer prices, increased by 10.6pc in June 2024 compared to 9.9pc a month earlier and an increase of 22.4pc in June 2023. The Sensitive Price Indicator (SPI), tracking essential item prices weekly, recorded at 16.6pc against 15.3pc in previous month and 34.9pc in June 2023.

According to PBS data, various commodities experienced significant fluctuations. Tomatoes saw a notable increase of 39pc, followed by onions 20.7pc, gram pulse 10.2pc, chicken 8.3pc, potatoes 6.7pc, besan 6.4pc, butter 6.3pc, fresh fruits 4.6pc, cigarettes 4.6pc, maash pulse 3.2pc, gram whole 2.9pc, condiments and spices 2.5pc, milk products 2.48pc, fresh milk 1.8pc, beans 1.6pc over the previous month. Similarly, gur, meat, fish, moong pulse, milk powder also increased but less than one per cent each.

However, wheat flour price reduced by 8.9pc, wheat by 7.9pc, wheat products by 7.75pc, eggs by 5.1pc, rice by 4.15pc, bakery and confectionary by 2.5pc and masoor pulse by 2.3pc and fresh vegetable prices fell by 2.1pc over the previous month.

In the non-food segment, electricity charges increased by 8.1pc, tailoring by 4.6pc, transport services by 4.4pc, textbooks by 2.7pc, drugs and medicine by 2.2pc, hospital services 1.95pc, personal effects by and hosiery by 1.5pc each. Medical tests were expensive by 1.4pc, garbage collection and communication apparatus were costlier by 1pc each. However, 10.8pc decrease was seen in the prices of liquefied hydrocarbons and motor fuel price reduced by 5.4pc.

Meanwhile, Jamaat-e-Islami Emir Hafiz Naeemur Rehman announced a sit-in protest in Islamabad against the rise in electricity tariffs and the massive and unfair taxation measures, introduced in the budget.

Addressing a press conference at Mansoorah, Lahore, on Monday, he said the sit-in would take place on July 12, demanding that the government provide relief or face resistance. He mentioned that the JI is also considering the option of a shutter-down strike, with an announcement potentially coming soon. The sit-in is part of the “Haq Do Awam Ko” movement. Naeemur Rehman emphasised that the JI is the only political party advocating for the public’s rights. He made the announcement after consulting the party leaders gathered in Mansoorah.

JI Secretary General Amirul Azim, Vice-Emir Dr Usama Razi and Information Secretary Qaisar Sharif accompanied him during the press conference. He highlighted that prolonged load-shedding and inflated bills had made life miserable for people. He criticised the IPPs for collecting billions of rupees in capacity charges without producing electricity. He noted that K-Electric was imposing long hours of load-shedding in Karachi, leading to deaths from suffocation and heat waves.

The JI chief criticised the government for making the budget under IMF directives, with the PM admitting the fact proudly. He expressed surprise that the rulers feel proud of their subservience to global donor instead of feeling ashamed. He criticised the ruling elite for uniting to impose heavy taxes on people while enjoying luxuries themselves, increasing the petroleum levy, and adding a fixed tax to electricity bills.