Thank God, we have finally realized that, what we needed the most was growth and the overall boost to the economy through corrective structural measures rather than the typical punitive mindset towards businesses.
This is reflected from the needed structural corrections made to the Finance Bill, which would be followed up by a number of such ‘deflationary’ measures that will also help masses have some indirect relief.
Amongst the twin deficits, fiscal deficit is mostly the rootcause not the current account deficit (CAD).
High CAD is rather an effect. So, corrections on the fiscal side through right mix of growth and incentive is vital. Therefore, if I were to chose the lesser evil between taxing for fiscal deficit versus growth/boost thru structural corrections, I would have chosen the same as done by the Finance Minister Asad Umar.
Absolutely a good choice of having a gradual boost to businesses, rather than raising costs to fund deficit thereby perpetuating the status quo!
Indeed, few billions here and there thru tax relieves would not make any significant difference to the already drained fiscals, but thru such pro-business meaures it importantly gives the overall policy direction and the economic sense that are key ingredients to be considered by the investors.
This has been provided in the corrective measures, truly reflecting that the say of the business community is important in economic decisions.
This should boost confidence further, as it essentially shows business and investemnt are priorities. And that, taxes are not improved in isolation rather a function of growth and investments, provided the number of taxpayers are at the same time added through incentives, right mix of penalty and increased costs for non-filers. Correction made ton that front too.
Though challenges are still rife with respect to quantum of and handling the fiscal deficit, but needed flows from friendly countries at a much lower cost, significant trade improvements and planned investments (package of $30 billion in total) from them, followed by others, with oil down 30% (blessing in disguise) thereby improving negotiating position of the country with the foreign donors, improving country risk premia (country bond yields down thereby providing room for lower rates to be offered on upcoming bonds), such corrective business-friendly, exports-friendly and pro-industry, EoDB-driven meausres should all put the economy back on track for sustained prosperity and growth.
In short, opposition is finding very hard to criticize. This bill deserves critiques’ award.
By Khurram Shahzad