Pakistan: Government unveils pro-business, anti-worker federal budget

Ali Mohsin

As its term of office nears completion, Pakistan’s scandal-ridden government, led by the Pakistan Muslim League (N), unveiled a pro-business budget last Friday in which the needs and concerns of the country’s working class and rural poor find no expression.  Among the most striking features of Rs5.9 trillion ($51 billion) federal budget for 2018-2019 are the cuts to development programs and the massive increase in defense spending. The government has also been criticized for failing to explain how it will raise the necessary revenues to fund its expenditures and make up for the tax cuts included in the budget.  

Defense spending and debt serving account for nearly two-thirds of the anti-worker budget, leaving little for Pakistan’s chronically underfunded education and healthcare systems.  The government allocated a whopping Rs1.1 trillion ($9.6 billion) for defense spending, an 18 percent increase over the previous fiscal year. This figure does not include expenditures on the country’s nuclear and missile programs or on major planned military hardware acquisitions. The Rs260 billion allocated for the pensions of military personnel and the Rs45 billion reserved for security enhancement are also not included in the defense budget.  

During its tenure, the PML-N has clashed with the military-intelligence apparatus over the latter’s hardline stance on India and its support for the Afghan Taliban.  The military, which jealously guards its control over Pakistan’s foreign policy, has sought to punish the PML-N for its assertiveness. The judiciary’s selective targeting of the PML-N leadership with corruption cases is certainly encouraged by the military, so as to weaken and neuter the civilian government. The massive increase in defense spending could therefore be an attempt by the ruling party to ease tensions with the army.

In addition to the enormous increase in defense spending, the PML-N’s proposed budget also includes significant giveaways to big business.  For example, it includes a plan to reduce the corporate tax rate by 1 percent each year until 2023, eventually bringing it down to 25 percent. Similarly, the government plans to gradually reduce the super tax, currently at 3 percent for non-banking companies and 4 percent for banks, by 1 percent each year until it is eventually phased out. In order to boost the Pakistan Stock Exchange, the government has also withdrawn the tax on bonus shares and rationalized broker taxes in its proposed budget.  

Pakistan’s corporate elite has been given much to celebrate. Unfortunately, the government’s generosity does not extend to working people.  Development spending has been reduced by 20 percent in the proposed budget, a massive decrease which the poor will feel most acutely. While the overall budget has been increased by nearly 15 percent from last year, the amount allocated for education and healthcare has only been raised by 7 percent and 8 percent respectively.  

The government also refused to increase the miserly minimum wage.  Earlier this month, thousands of workers protested outside the National Press Club in Islamabad to demand higher wages.  They demanded that the minimum wage be increased to Rs 30,000. The protest was organized by the All Pakistan Workers Confederation and was attended by employees of the Water and Power Development Authority, Pakistan Railways, Pakistan International Airlines, as well as textile workers and chemical workers.  The just demands of the workers were predictably ignored. The government did, however, include a 17 percent increase in the budget for the Prime Minister’s House and a 15 percent bump for the President’s House.