Finance Minister Miftah Ismail addresses a press conference in Islamabad. Photo courtesy PID
Finance Minister Miftah Ismail on Thursday justified the government’s focus on increasing taxes for the privileged segments of society, stressing that they are “able to pay” and should do so.
“In Pakistan, it is the poor who have always suffered the burden of taxes,” he told a press conference alongside Information Minister Marriyum Aurangzeb. “But the [P.M.] Shehbaz government has decided to impose taxes on the rich,” he said. “We will ensure that sacrifices are shared,” he stressed, adding that this was being borne out in the “progressive” budget presented for the upcoming fiscal year.
Noting that the incumbent government had not increased any indirect taxes or taxes on consumption, he said this was in contrast to previous budgets, which “had a disproportionate impact on the poor.” He emphasized that the government was imposing additional taxes on several industries, including those with links to politicians, such as the sugar industry. “Even my company will have to pay more taxes now,” he claimed.
“One percent tax will be increased on people whose annual income is over Rs. 150 million; 2 percent more taxes for those earning over Rs. 200 million or more; and those earning over Rs. 250 million will have to pay 3 percent additional taxes,” he said.
Referring to the revival of a suspended bailout program from the International Monetary Fund (IMF), Ismail said they had succeeded in reaching an understanding over the budget. “Tomorrow (Friday), I will deliver a winding up budget speech in the National Assembly, after which we will close the budget,” he said, adding that the budget sought to break Pakistan’s habit of relying on other countries for loans so the country could begin the journey to becoming “truly independent.”
During the press conference, the minister reiterated that the government had no choice but to take “tough” decisions to counter the economic policies undertaken by the ousted PTI government. “Imran Khan and his party led Pakistan towards four historic budget deficits,” he said, adding that the difference between expenditures and taxes was the highest in the country’s history during the PTI’s tenure.
“The people who lecture us today … you left the country on the brink of collapse. I have never before seen such a touch-and-go situation in Pakistan. You left behind a deficit of billions of rupees. Where was your concern for the nation then?” he said, adding that it was “very good” that the previous government was now concerned about the negative impact of inflation. Accusing Khan’s government of reneging on its agreement with the IMF by announcing unfunded fuel subsidies that had brought the country on the verge of default, he said the incumbent government was working to overcome this dire economic situation.
“The stock market is up, the rupee is recovering and slowly we are becoming financially stable,” he said, while admitting that inflation remained punishingly high. However, he claimed, the situation would improve within a month or two.
On Wednesday, Ismail announced that Pakistan had signed a $2.3 billion loan facility agreement with a Chinese consortium of banks, adding that inflows were expected within a few days. “We thank the Chinese government for facilitating this transaction,” he said in a posting on Twitter.
Since the announcement, the rupee has gained against the U.S. dollar, going from record lows of 211 to the dollar to roughly 206.5. The stock market has also posted confidence in the development, increasing by nearly 450 points during trading on Thursday.