Incentives or amnesty

After showing reluctance in imposing a complete lockdown due to the spread of coronavirus, Prime Minister Imran Khan has hinted to re-open the agriculture and construction sectors along with allied industries for business to mitigate the economic effects of the pandemic.

The prime minister certainly understands the risks of the health crisis as he warned that the government will reassess the situation in the upcoming weeks. He said it was dangerous to assume that the virus would not have much effect in Pakistan due to stronger immune systems. He stated that coronavirus does not discriminate against anyone and we should be ready for a prolonged long battle ahead.

Despite these warnings, the decision to reopen these major sectors is ill-advised and could aggravate the situation. This implies that people return back to work by mid-April to spur economic activity but it also suggests that people violate lockdown and safety precautions. This is dangerous and fraught with risks as the numbers of cases are expected to rise. The government would certainly want to keep the economy afloat but it should not be at the cost of people’s health.

The prime minister also announced an incentive package for the construction industry. It suggests that investors would not be asked about their source of income and a fixed tax would be introduced. This was a longstanding demand of investors and the timing of the policy makes it more like an amnesty scheme rather than a relief measure.

Among the incentives is a massive tax break of up to ninety percent for those investing in the flagship Naya Pakistan housing scheme along with a whopping Rs30 billion subsidy. The prime minister insists such measures are meant to support daily earners, generate jobs for those who have lost their incomes during the lockdown.

Although the government is hoping to strike a balance to maintaining a lockdown and not affecting livelihoods, it should be realised that tax incentives benefit wealthy investors rather than ordinary workers. These are also insufficient to revive the construction sector and will rather allow corrupt elements within the industry to whiten their illicit incomes.

There is no doubt that the coronavirus pandemic is a mammoth challenge and the government is providing incentives but they should benefit those worst affected by the lockdown. It should rethink such ill-advised policies before it has an effect on people’s health and the government’s credibility, particularly during a crisis situation.