We’re Paying 5 Percent Of Our Salary Above Rs 50,000 For The Luxuries Of Imran Khan And His Cabinet
Ali Salman Andani in this article dissects the federal and provincial development budgets and questions Imran Khan government’s priorities in the light of extremely high new taxes imposed in Budget 2019.
It was quite shocking to read the sentence at the very top of recent tender notices issued by the Capital Development Authority (CDA) in Islamabad. It invited contractors to submit proposals for the construction of “New Cages for Parrots at the Zoo of Aiwan-e-Sadr”, the President House, which would cost 1.94 million Pakistani rupees (US$12,000), and for the procurement of “Terracotta Pots and Matqa Pots for Nursery” and different “Indoor/Ornamental Plants and Morpankh Plants” for the President House – which would cost the national exchequer a whopping 17.8 million and 13.01 million rupees respectively.
The message was something like this: Pay your property taxes and water bills properly; help us serve you better. But I think that the CDA should consider replacing it in upcoming notices with the following line: Pay your property taxes and water bills properly; help us enjoy a posh life.
Whether it is Prime Minister Imran Khan, or the president, or the cabinet ministers (of whom 40% are un-elected), there are two characteristics they all have in common: incompetence and ignorance.
Remember the Mehfil–e-Mushaira organised by the same president, Dr Arif Alvi, last December, which cost taxpayers 3.6 million rupees? When he was asked in an interview about the matter, Alvi responded that he was totally unaware of the cost.
In the case of the abovementioned tender notices, he claimed that the tenders had been released without obtaining approval from the competent authority, and that when he learned of the matter, he immediately took action and withdrew them.
The president of a nuclear-armed state is unaware of what is happening in the President House?
What a joke this Pakistan-Tehreek-e-Insaf (PTI) government is. By the way, were they issued without the approval of the competent authority, or is it the case that Mr President is not the real competent authority?
On June 11, Khan’s government presented the budget for the fiscal year 2019-2020. A sum of 1.48 trillion rupees – that is, 18.6% of the total resources estimated for 2019-20 and 42.7% of the net revenue of the federal government for the fiscal year – has been allocated for the almighty defence sector.
It is actually 6% higher than the outgoing fiscal year 2018-19’s defence budget.
According to PTI’s 2018 election manifesto, “Pakistan’s National Curriculum has not been reviewed or updated in the past 12 years, and no national consensus on the medium of instruction and teaching of languages exists. The education budget allocation remains well below the prescribed 4% of the GDP and poor education planning results in supply and demand mismatches”.
It was quite easy for the incompetent Imran Khan to make tall promises in his election manifesto and during the election campaign as far as education is concerned, but reality is far from his misrepresentation of facts.
PTI supporters will try to hide behind the 18th Constitutional Amendment, which gives provinces the authority to allocate the budget for education from the revenue share they receive in the national budget. To all of them, I would simply say that PTI is in power in three of the four provinces of Pakistan.
This year, the Punjab government (where PTI is in power) has allocated 46.9 billion rupees ($289 million) for developmental budget of education.
“Nearly 22.5 million children are out of school in Pakistan and [others] are not learning commensurate to their age or grade. The public school delivery system is under-resourced and has capacity constraints. At the higher education level, research volume and quality is limited, and university administration continues to be highly politicised.”
Unfortunately, for the upcoming fiscal year, 2019-20, this government has allocated just 77 billion rupees for education affairs and services — which is 20% less than the amount spent in the outgoing fiscal year.
Also, it is worth noting that the Higher Education Commission will receive 29 billion rupees – which is 19% less than the previous year’s allocation.
According to the Graduate Employability: Employers’ Perception Survey Report 2018, 78% of employers in Pakistan are not satisfied with the quality of fresh graduates – but despite this, the government reduced the education development budget of Punjab by 43%.
According to the Annual Status of Education Report 2018, of the fifth-graders surveyed in rural areas of Pakistan, 48% cannot read a sentence in English and 44% are unable to read a story in Urdu, Sindhi or Pashto from Class 2 level textbooks. Forty-seven percent cannot do two-digit division.
Pakistan stands at 94th position when it comes to the overall quality of education according to the World Economic Forum (2018). But why would Imran Khan risk his political career for the sake of poor and middle-class citizens of Pakistan, when his children are not even Pakistani citizens? This highly vulnerable education system won’t affect their lives but the lives of poor and middle-class Pakistani children.
The Health Affairs and Services budget has been decreased by 21% as compared with the outgoing fiscal year to just 11 billion rupees.
Again, I warn you, dear PTI supporters, you can’t hide behind the 18th Constitutional Amendment, because your government in Punjab has reduced the budget on health by almost 1.8% to 279 billion rupees.
Contrary to what we see in reality, Pakistan Tehreek-e-Insaf’s election manifesto says, “PTI will ensure universal health coverage and enhance the focus on primary care while upgrading secondary and tertiary facilities.”
Similarly, for environmental protection, the government has allocated 470 million rupees – which means that it is 63% less compared to the previous fiscal year’s allocation.
So, if you are earning a salary of more than 50,000 rupees ($318) but less than 100,000 a month, you will pay 5% income tax on the amount above 50,000 rupees. Assume that you have two children and their monthly education expenses are 15,000 to 20,000 rupees (which is a minimum if your kids are studying in a private school) and you incur utility (electricity, gas, water) bills of 10,000 to 15,000 rupees, plus rent of your house 15,000 rupees, groceries 15,000 to 20,000 rupees, which makes a total of approximately 55,000 rupees ($350) of monthly expenditure. Say your salary is also 55,000 rupees, or $350. You will end up with a negative-250-rupee (-$1.50) balance at the end of the month.
Thanks to Mr Imran Khan, because he will add your 250 rupees to the defence budget or to the PM House budget for his luxuries. After all, who will pay for his everyday helicopter travel expenses from Bani Gala to PM Secretariat and back to Bani Gala?
Now Pakistanis will pay more to buy ghee/cooking oil, as the federal excise duty (FED) will be raised to 17%.
Also, a 9% increase in the FED on sugar will be imposed. FED on carbonated and non-carbonated drinks will be increased to 14%.
So let me suggest a new slogans for Khan’s 2023 election campaign: “Vote for Imran Khan, to get rid of poor and middle class,” or “For defence and government’s luxuries, you all will pay.”
According to a report, right now the State Bank of Pakistan has $7.8 billion of foreign exchange reserves, enough to pay for about two months of imports. And the amazing Imran Khan government has decided to put a 17% sales tax on the export-oriented industrial sector (textiles, leather, carpets, surgical goods and sports goods) if the goods are sold domestically.
The problem is that the government doesn’t make refunds on time, which seriously disturbs the availability of cash for these sectors. Also, zero-rating of utilities (gas, electricity, fuel) for the export-oriented sector will be withdrawn. This will indeed affect exports by hitting hard the close-to-none comparative advantage these industries enjoy internationally.
Pakistan can simply not afford to bear the shock that will come as a result of the reduction in exports.
It is already facing the shortage of foreign exchange reserves, and disincentivising export-oriented industries will be a step further toward doom.
The government of Pakistan has allocated 4.1 trillion rupees ($26.1 billion) for debt servicing and repayments. Interest payments on external debt will cost 359.764 billion rupees ($2.2 billion), while the repayments will cost 1.095 trillion rupees.
As far as domestic debt is concerned, it will cost the tax payers 2.531 trillion rupees. On the one hand, Pakistan is facing the burden of humongous quantities of domestic and external debts; on the other, the Imran Khan administration’s thirst for luxuries is hitting the national exchequer hard.
Real gross domestic product will grow at 2.4% in FY 2019-20 – PTI supporters might say that the government is simply increasing public spending to support the real output. Idiots!
In the outgoing fiscal year, the Imran Khan administration passed a supplementary budget of 412 million rupees for the maintenance of the aircraft for the prime minister and the president.
And if the tender for parrot cages has surprised you, there’s more.
CDA Islamabad recently issued a tender notice to invite contractors to submit a proposal for the supply of 1.8 million rupees’ worth of furniture for the house of the Speaker of the National Assembly and 215,000 rupees for hand-made carpets for the deputy chairman of the Senate.
As usual, the government will run a huge fiscal deficit in the upcoming fiscal year, which will be equal to 3.1 trillion rupees ($19.7 billion), or 7.1% of the GDP according to the budget documents.
The author is an economic and political analyst. He writes for Asia Times, DailyO, Modern Diplomacy and others. Tweets @an_alisalman