EDITORIAL: Mini-budget: bitter pill - Thursday, March 17, 2011

Source : http://dailytimes.com.pk/default.asp?page=2011\03\17\story_17-3-2011_pg3_1

The government has introduced a Rs 120 million mini-budget after President Asif Ali Zardari promulgated presidential ordinances to this effect. As per the Income Tax (Amendment) Ordinance 2011, “a surcharge shall be payable by every taxpayer at the rate of 15 percent of the income tax payable” from March 15 to June 30, 2011 and this surcharge “shall be paid, collected, deducted and deposited at the same time and in the same manner as the tax is paid, collected, deducted and deposited”. The government has levied 17 percent general sales tax (GST) on imported and locally produced tractors, fertilisers and pesticides. The facility of zero-rating on plant, machinery and equipment including parts thereof has been withdrawn. Export-oriented sectors will only be exempted from GST if they are registered. These measures will generate Rs 53 billion before the next budget in order to achieve the government’s revised target of Rs 1,600 billion revenue collection. A two percent surcharge on each unit of electricity above the initial 50 units has been imposed. The government has decided to save Rs 120 billion by imposing a ban on all fresh recruitments, purchase of durable goods, and announced a 50 percent cut in expenditures on POL entitlements, purchase of stationery and travelling allowance. All these measures have been taken keeping in mind the International Monetary Fund’s (IMF’s) conditions to restrict the current year’s fiscal deficit below 5.5 percent of GDP.

Revenue collection had fallen below the target, therefore the government had to impose these new measures in order to reach its goals before the next budget. After the experience of the reformed general sales tax (RGST), it seems the government was in no mood to take another risk. Presidential ordinances were issued on an emergency basis given how long it would have taken to get the approval of parliament, if at all it proved forthcoming, before implementing these measures. The IMF programme came to a virtual standstill because the RGST was not implemented as per our end of the bargain. These are the alternative measures in the light of the economic crisis. It is hoped that for the IMF programme to get back on track, these measures will sufficiently satisfy the IMF.

The mini-budget is a bitter pill for sure but one that we must swallow given the fiscal emergency in the country. Inflationary impact of these measures will be there for sure and will be a source of much more misery for the general public. Since exemption for agricultural inputs and some industrial inputs has been withdrawn, it will affect the prices of products, especially food items. Given the economic crunch, there seems little other choice. These measures will surely lead to protests, both from the public and the political parties, but all politicians should realise that this is no time to play politics with the straitened economy. If they cannot come up with alternative solutions to the economic crisis, they should appreciate what the PPP-led government is doing in order to save Pakistan from going bankrupt. Had the political parties supported the RGST, the government would not have had to present this mini-budget.

Pakistan is going through one of its toughest economic phases. The only way it can survive financially is through aid and loans. The IMF programme is crucial to the country’s survival. If it means imposing more taxes and taking difficult but necessary decisions, there is no other choice. The only other alternative is to restructure the economy in the interest of the people but that is a long-term process. For the time being, we are stuck with such short-term measures. *

SECOND EDITORIAL: Hyderabad prison incident

That the prison authorities resorted to use of brutal force to quell a protest by prisoners in Hyderabad Central Jail is highly regrettable. The killing of seven and injuring of around 30 prisoners indicates the scale on which the police authorities used firepower to control the protesting prisoners.

It is quite unlikely that the prisoners revolted against the jail administration for a temporary shortage of facilities and blockage of water, gas and electricity supply. A massive protest shows that this problem must have existed for quite some time. The underlying question here is why should a problem like this be allowed to fester to a point where the prisoners have to resort to collective protest? Why did the jail authorities not facilitate the prisoners when they registered their complaints peacefully?

Moreover, the reaction of the police to this protest is not only alarming but highly condemnable. Surely, there must have been other more appropriate ways to control this outbreak than opening fire at the inmates. The prisoners in jail are the responsibility of the state and the jail administration is delegated the task to rehabilitate them and ensure their wellbeing. What was the need of using such excessive force?

The Sindh High Court sought a comprehensive report about the incident from the district and sessions judge, Hyderabad. However, this might not be sufficient. This incident requires a higher level enquiry, preferably by a judge of the Sindh High Court.

This is not the first time an incident like this has taken place. In fact, countless protests have been reported in different district jails in recent years. The conditions of jails in Pakistan are deplorable, housing many more than their capacity. Prisoners are deprived of even the basic amenities. It is doubtful if there are any rehabilitation programmes available, or if any activities are organised to keep them occupied. As a result, novices who go to jail come out as hardened criminals. We must improve the conditions of our jails and facilitate prisoners as much as possible. Our objective should be to rehabilitate them not just detain them. Developed countries have highly developed systems focused on reforming the detainees rather than simply keeping them behind bars. The world has moved on; it is time we did too. *

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