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Tuesday Jun 11 2019
By
Web Desk

PTI govt unveils austerity budget with Rs1.12tn in additional taxes

By
Web Desk

ISLAMABAD: The Pakistan Tehreek-e-Insaf (PTI) led federal government on Tuesday unveiled a Rs7,022 billion austerity budget for the fiscal year 2019-20, setting ambitious tax collection targets to stabilise a faltering economy.

The budget sets an ambitious Rs5,555bn target for the Federal Board of Revenue—a 25% increase or Rs1.12 trillion in additional taxes from the previous year.

The increased FBR revenue would be supported by a Rs346bn increase in direct and Rs773bn rise in indirect taxes from the previous budget, which would mean Rs407.7bn in additional sales tax revenue, Rs363bn increase in income tax collection, Rs265.5bn rise in customs duties, and a rise of Rs99bn in federal excise duties as compared to the previous year.

"A challenging target of Rs5,555bn FBR revenue collection will be combined with aggressive expenditure controls to reduce primary deficit to 0.6% of GDP," said State Minister for Revenue Hammad Azhar presenting the budget in the National Assembly.

He said the ambitious increase in tax revenue would be combined with "unprecedented reduction in expenditure" by both the civil administration and the military to bridge the widening gap between the government's revenue and expenses.

"We have slashed the civil budget by five percent while the military budget will remain the same," he added as he announced the details of the plan.

"The financial year 2019-2020 will be a year for economic stability. We will make some tough decisions and will try to save the poor public from the effects of those tough decisions."

The government says the budgetary proposals are focused on economic stability and sustainable growth, with an emphasis on austerity, revenue generation, and uplift of downtrodden segments of society.

The special budget session of the National Assembly was marred by protests from opposition parties, which accused the government of presenting a budget "dictated" by the International Monetary Fund.

The government has secured a provisional agreement for a $6bn bailout from the IMF, contingent on measures to cut a rising budget deficit.


Budget features

  • Total budget outlay Rs7,022bn—30% greater than previous year
  • Rs1,863 billion fixed for Public Sector Development Programme 
  • Budget deficit to be Rs3,560 billion
  • Tax revenue target set at Rs5,822bn
  • FBR tax revenue target set at Rs5,555bn
  • Non-tax revenue target set at Rs894.5bn
  • Current expenditure set at Rs6,192bn
  • Development expenditure set at Rs843.4bn
  • Rs701bn earmarked for Federal PSDP 
  • Rs1,152bn fixed for Defence Affairs and Services expenditures 
  • Civil government expenditure to be Rs431bn
  • Higher education expenditure of Rs45bn
  • Government sets aside Rs271bn for subsidies
  • Inflation targets set at between 5 and 7 per cent
  • General sales tax on goods to remain at 17 percent
  • 3% value added tax on import of mobile phones eliminated
  • Rs5,200 FED proposed on every 10,000 cigarettes
  • Sales tax on sugar proposed to be be increased to 17 percent
  • Rs40 billion subsidy to be given for electricity, gas
  • Development expenditure for tribal districts fixed at Rs152 billion
  • Rs45.5 billion allocated for Karachi’s development programme 
  • Stipend through BISP scheme increased from Rs5,000 to Rs5,500
  • Govt aims to eliminate circular debt in coming years
  • The government has formed a new ministry to eliminate poverty, which will introduce programs for social safety. People benefiting from the Ehsaas program include the poor, orphaned, homeless, and disabled sectors of the population.
  • Ration card scheme being introduced. 80,000 people to benefit from this scheme with interest-free loans. 

Taxes: 

  • Minimum taxable income for salaried class to be Rs0.6mn per annum
  • 11 progressive tax slabs ranging from 5 to 35 percent proposed for salaried class
  • Minimum taxable income for salaried class to be Rs0.4mn p.a.
  • Eight progressive tax slabs ranging from 5 to 35 percent proposed for non-salaried class
  • Non-filers no more restricted from purchasing property 
  • Non-filers to be allowed to purchase property of over Rs5mn
  • Corporate tax to remain at 29 percent for next two years

Wages:

  • 10 per cent increase in salaries for government employees from grade 1 to 16, including armed forces employees
  • 5 per cent ad hoc relief for government employees from grade 17 to 20
  • No increase in salaries for civilian government employees from grade 21 to 22
  • Minimum wage set at Rs17,500
  • Pensions increased by 10 per cent
  • Ministers agree to voluntary 10 per cent cut in salaries 


Opposition members protest 

Photo: PTV News 

During the budget presentation, members of the opposition protested in front of the NA speaker's dais.

Opposition members chanted slogans against the government and Prime Minister Imran Khan.  


BUDGET RELATED STORIES

 
















END OF LIVE UPDATES [PRE BUDGET]


10% decrease in salaries of advisers, special assistants

Sources have informed Geo News that the budget will have a 10 per cent decrease in the salaries of advisers and special assistants. 

National Assembly session begins

The session of the National Assembly is underway. The PTI government will present the budget during the session. 


'Govt hiding inflation under shroud of accountability'

PPP chairman Bilawal Bhutto Zardari said on Tuesday that the federal government was trying to sweep a flood of inflation and rising prices under a shroud of so-called accountability and arrests.

"The problem is not of (the arrests of) Nawaz Sharif or Asif Zardari," Bilawal said at a joint session of opposition parliamentary parties. "The question is which direction the country is going in."


‘Imran doesn’t know how to control inflation’

PML-N leader Khurram Dastagir speaking to reporters said Prime Minister Imran Khan did not know how to control inflation.

Dastagir said the government’s budget would be a ‘storm’ of inflation, adding it will contain a mountain of taxes.

“We will let them [government] present the budget and not will give them the opportunity to run,” said Dastagir.


Joint session of opposition parties

Leader of the opposition in the National Assembly and leader of the Pakistan Muslim League-Nawaz (PML-N), Shehbaz Sharif chaired a joint session of the opposition parties. The session was attended by Pakistan People's Party (PPP) chairman Bilawal Bhutto-Zardari and PPP leaders Raza Rabbani, Sherry Rehman, Khursheed Shah, PML-N lawmaker Ahsan Iqbal, and other opposition leaders.

Sources said the leaders discussed the political situation following the arrests of PPP co-chairman Asif Ali Zardari and PML-N leader Hamza Shehbaz.

Opposition leaders also formulated a strategy for the budget session during the joint meeting, sources said.


PM chairs special budget session of federal cabinet

Prime Minister Imran Khan is chairing a special budget session of the federal cabinet in Islamabad.

The PM's Adviser on Finance Dr Abdul Hafeez Sheikh and other officials are briefing the cabinet on the budgetary targets set for the upcoming fiscal year, sources said. They added that revenue targets set by the Federal Board of Revenue (FBR) and other matters related to different ministries are also being discussed.

The federal cabinet will give its nod to the Finance Bill in the special budget session. 


Hammad Azhar to present Federal Budget

The federal budget 2019-20 will be presented by Minister of State for Revenue Hammad Azhar, sources informed Geo News on Tuesday.

According to sources, a debate would be sparked in Parliament if the budget was presented by Advisor to the Prime Minister Imran Khan on Finance Abdul Hafeez Shaikh.


What to expect from the budget 2019

The total outlay is an estimated Rs. 6,800 billion

  • A target of Rs5,550 billion tax collection has been set for the Federal Board of Revenue (FBR)
  • In the federal budget, the non-tax income is estimated to be around Rs750 billion. While the receivable target is suggested to be Rs3,800 billion
  • Of the total outlay, Rs3000 billion will be handed over to the provinces
  • And Rs2,900 billion will be set aside to repay interest on loans
  • The budget deficit may exceed Rs2,700 billion during the next fiscal year
  • Rs1,837 billion have been earmarked for development projects in the country, of which Rs925 billion will go to the federal government, while Rs912 billion will be for development work in the provinces
  • Approximately 7.5 per cent sale tax will be applied on the manufacturing sector
  • In the budget, the government aims to increase the taxpayers in the country to 40 million by next year. It has further suggested legal proceedings against those who do not file taxes
  • The sales tax on non-registered industrial and commercial companies will be increased from 5 per cent to 20 per cent, especially of those consumers whose bill is more than Rs20,000 per month.
  • Further, non-filer consumers in the industrial and commercial sector will have to pay 25 per cent income tax
  • It will be mandatory for all Pakistanis to have a national tax number (NTN)
  • Tax will be hiked up for the non-filers who travel by air on business class tickets. One recommendation is to increase their airfare.
  • The federal government will have a share of Rs675 billion from the Public Sector Development Program
  • Sin tax of Rs10 will be imposed on a packet of 20 sticks of cigarettes


Federal Cabinet to approve Finance Bill 

The Federal Cabinet meeting chaired by Prime Minister Imran Khan will be held shortly during which Abdul Hafeez Shaikh will give a briefing on the budget.

The cabinet is expected to approve the Finance Bill during its meeting.


Opposition parties to meet ahead of budget session 

Opposition parties have conveyed a meeting ahead of the budget session. The meeting is scheduled to be held at Parliament House at 4 pm. 

The meeting which will be attended by PPP, PML-N and other parties will deliberate on the strategy for the budget session. 


Development budget features 

Government to allocate Rs951 billion for the development budget 

  • Rs70 billion to be allocated for Defence Production Division
  • Rs580 million for petroleum, Rs28 billion for education
  • Rs16 billion for Pakistan Railways, Rs6 billion for science and technology
  • Rs85 billion for the Ministry of Water
  • Rs48 billion for FATA Development Plan
  • Rs65 billion for IDPs 


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