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Mini Budget……!!!

By: Muhammad Ibrahim Bhatti

In a democracy, taxes are levied through a budget that is approved by parliament. Decisions on the imposition of taxes in emergencies are called mini-budgets in the vernacular, but the only way to implement them is through parliamentary approval. Even if the two ordinances issued by the President on Thursday were of urgent importance, it would have been better to convene an emergency session of the Parliament and present the bills and pass them after discussion, scrutiny and necessary amendments. Obtained from the lower house and upper house. In democracies around the world, it is not desirable for an important task like the budget to be done through ordinances, ignoring parliament. One of the two laws issued by the President is the Income Tax Amendment Ordinance 2021 which came into force immediately. The ordinance came into force in the last week of March, while the annual budget falls in May or June. The ordinance abolished tax exemptions of Rs. 140 billion in various sectors, while such exemptions serve as a means of improving the performance of the sectors concerned, accelerating economic activity and encouraging them. The Income Tax Amendment Ordinance, which came into force immediately, has made more than 75 amendments to the tax laws and introduced a new 13th Schedule. Under the ordinance, exemption on film industry, textbooks, fresh graduates, IPPs, real estate investment, sukuk bonds has been abolished. Businessmen who do not display NTN will be fined Rs 5,000, Rs 40,000 for failing to collect or deduct tax or 10% of the tax amount. Tax exemptions given to sports organizations, including the PCB, have been converted into tax credits. The tax commissioner will be fined Rs 50,000 or 50 per cent of the tax for obstructing access to business or premises, documents, computers or stock. An ordinance to amend the NEPRA Act has also been issued, giving the federal government the power to increase additional surcharges and increase the price of electricity. Under this option, a surcharge of Rs 40 per unit will be levied and in the next two years, electricity will be priced separately at Rs 5.5 per unit. The government will be able to impose a surcharge of up to 10% of the price of electricity. This will impose an additional burden of Rs. 150 billion on the people in terms of surcharge, while revenue of Rs. 1400 billion is required annually for the power system. Under the amended ordinance, NEPRA will have extraordinary powers in setting electricity prices. The issue of the issuance of the two ordinances comes with the approval of the release of تیس 500 million as the third tranche of the International Monetary Fund (IMF). The Board of the Financial Fund has assured that in the next budget, general sales tax, income tax and power tariff will be increased by 34% (approximately Rs. 900 billion). In many cases, tax breaks are in fact seen as a necessity for national development and a source of economic growth. Their elimination leads to inflation and some difficulties, while the government’s move is likely to reduce the purchasing power of ordinary people. Wouldn’t it be nice if the government could convene an urgent session of parliament and present both ordinances in it and find a way through discussion and deliberation to help meet the demands of the IMF? Inflationary pressures can be reduced and democratic values ​​can be protected.

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