ghazi52
Think Tank Analyst
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Budget 2024-25: Protecting ‘sacred cows’ again
Afshan SubohiJuly 1, 2024
The government claims it is unable to do much to appease the business community given the current circumstances, even if it wishes to.
The business community’s tough stance towards the budget was expected. Although the government asserts it is in talks with business leaders, significant revisions in fiscal policy are unlikely.
Therefore, minor adjustments to reverse or scale down certain taxation measures may occur. Fiscal space for these changes has been created by cutting Rs250 billion from the Public Sector Development Programme (PSDP).
These modifications are not expected to affect the essence of the budget, which will have already been passed by the National Assembly when this story is published. The revised PSDP has been reduced to Rs1.1 trillion from the originally proposed Rs1.4tr.
The core objective of budget FY24 is to manage the country within its means, which entails containing the fiscal deficit as desired by the International Monetary Fund (IMF). To achieve this, the government has opted to mobilise higher revenues rather than reduce the size of the budget.
Consequently, the size of the budget has increased by 25 per cent, rising from Rs14.4tr last year to Rs18.8tr this year. The revenue target has also been set at Rs12.9tr, which is 46pc higher than the last year.
The business community, aware of the economic challenges and the implications of IMF supervision in budget formulation, was irked by the proposed taxation steps.
They consider these measures to be unfair, harsh, and potentially counterproductive, fearing they might mobilise less revenue by paralysing businesses. In response, they have opposed these measures through multiple platforms, launched media campaigns, and threatened lockdowns and street protests if the government fails to show empathy and flexibility.
