Tax-free budget

Finance Adviser Abdul Hafeez said that Pakistan suffered a loss of Rs3 trillion in national income due to the coronavirus outbreak. While presenting the economic survey ahead of the annual budget, the adviser said they inherited a troubled economy on verge of bankruptcy.

The federal government is presenting its second budget today, while for the first time the government managed to reduce the budget deficit. The government has decided not to borrow from the central bank but there is uncertainty on how long the economic loss could sustain.

The coronavirus pandemic has gripped the entire world and the global economy is facing difficulties. In such a situation, Pakistan is also facing economic hardship. The economy is estimated to have faced Rs3 trillion loss and the GDP growth rate has shrunk.

The government has given a financial package of Rs1240 billion to the various sectors despite the existing economic woes, and Rs50 billion package for the agricultural sector. The prices of essential commodities, other than flour and sugar, have been stabilised while utility expenses of small businesses have been waived.

The government had declared 2020 as the year of economic stability before the outbreak but the virus hit the economy hard there was a significant reduction in revenue. The FBR has seen a massive drop in tax revenues and around Rs800bn loss was simply on account of revenue.

The outbreak has caused severe economic hardship due to a lack of business activity, rising unemployment rates, poverty rates and reduced purchasing power. The most welcome thing is that the government is not imposing new taxes in the budget in view of the difficulties of the people. In the current situation, additional taxes would create more burden on the people.