Actions of Desperation; the Federal Budget

Despite positive market reaction on expectations of more money to flow towards it the proposals of federal budget 2024-25 were a terrible poor show.

Not an iota of thought went into making this budget. It shows complete submission to dictates and an absolute freeze in policymaking. There's no effort made, nor even a mention of structural change. There isn't even a word on fostering an environment for growth, let alone addressing the biggest problem of circular debt. The target of revenue generation from additional taxes, a whopping 38% higher than the previous year's unmet target, is sheer folly.

Increasing taxes will not increase revenue. Only a functioning and growing economy can generate more revenue. The whole focus of the budget proposals is to increase tax rates wherever possible, without any effort to spur economic activity that is already reeling from high interest rates, a high exchange rate, and a politically unstable environment.

The biggest joke is the introduction of 'late filers' category. This is the height of ingenuity and a typical bureaucratic solution. The sole focus on documentation has already failed in sales tax imposition and bringing the whole chain into the documentation. Now they can have a field day only with the existing filers. The biggest speculative sectors remain untouched.

The FBR is trying to change the tax documentation culture while ensuring that all attempts to restructure the revenue collection empire remain untouched.

And the worst part is that these proposed measures will neither balance the budget nor make the economy more documented.

Actions of desperation bring no fruit. This budget exemplifies that perfectly. The lack of structural change and focus on growth reeks of a last-minute scramble, not a well-defined economic strategy.

Download the Budget in Brief
Download The Annual Budget 2024-25
Explanatory Memorandum on Federal Receipts