The Federal Budget 2022-23 with a total outlay of 9502 billion rupees has been announced, encompassing measures for sustainable economic growth, industrial and agriculture development and relief for the poor people.
Presenting the budgetary proposals for the next fiscal year in the National Assembly on Friday, Finance Minister Miftah Ismail said 3950 billion rupees will be spent on debt servicing. He said that a budget of 800 billion rupees has been earmarked for the next year's PSDP. He said 1523 billion rupees has been set aside for country's defence and 550 billion rupees for civil administration's expenditure. Besides, 530 billion rupees have been allocated for pension, while 699 billion rupees for targeted subsidies for the benefit of the poor people. An amount of 1242 billion rupees has been proposed for grants, which include the grants of Benazir Income Support Programme, Bait-ul-Mal and other departments.
The Minister said that FBR revenue has been estimated at 7004 billion rupees for the next fiscal year. This includes 4100 billion rupees share of provinces. The net revenue with the Federal Government will be 4904 billion rupees. The non-tax revenue will be 2000 billion rupees.
BUDGET RELIEF:
The Finance Minister said the budget of BISP has been increased to 364 billion rupees for the next fiscal year. In addition, 12 billion rupees have been allocated for provision of subsidy on essential commodities through Utility Stores Corporation. An additional amount of five billion rupees has been set aside for Ramadan Package.
The Finance Minister said the facility of Benazir Kafalat Cash Transfer Programme will be available to nine million deserving families under BISP in the next fiscal year. For this, 266 billion rupees have been reserved.
Miftah Ismail said that the scope of Benazir Education Stipend Programme will be expanded to ten million children. Over 35 billion rupees have been proposed for this programme. Ten thousand more students will be given Benazir Undergraduate Scholarship at a cost of nine billion rupees. The network of Benazir Nashonuma Programme will be expanded to all the districts, which will cost about 21.5 billion rupees. Besides, six billion rupees have been set aside for Pakistan Bait-ul-Mal for the medical treatment and assistance of deserving families.
The Finance Minister announced fifteen percent increase in the salary of government employees along with merger of the adhoc allowances.
He said the tax exemption slab for salaried class has also been increased from 600,000 rupees to 1.2 million rupees. This step will be benefit the salaried people and enhance business activities. The slab for business individuals and associations of persons has been increased from 400,000 rupees to 600,000 rupees.
He said tax on profit of Saving Certificates, Pensioners Benefit Accounts and martyrs family welfare accounts has been slashed from 10 to 5 percent.
The Minister said a new fixed income and sales tax system is being introduced for small retailers. Under this system, tax ranging from 3,000 rupees to 10,000 rupees will be collected through electricity bills. This will be a final settlement and FBR will not be entitled to ask any questions about this tax.
Miftah Ismail said there is a proposal to increase initial depreciation charges for industries and other businesses from 50 percent to 100 percent in the first year.
Besides, he said all the taxes from industrial units during import of raw material will be considered as adjustable to protect working capital of the business community.
The Finance Minister proposed tax exemption on import and local supply of solar panel. He said soft loans from banks will be arranged for the people who consume less than 200 units of electricity to purchase solar panel.
In order to facilitate the farmer community, the Minister announced to withdraw sales tax on tractors and agricultural machinery as well as on the supply of seeds of various crops, including wheat, maize, canola, sunflower and rice. Besides, he said, customs duty on agricultural machinery and its industry has also been abolished.
The Minister said fundamental changes have been proposed in alternate dispute resolution mechanism to facilitate taxpayers.
Miftah Ismail said customs duty, additional customs duty and regulatory duty on around 400 tariff headings have been rationalized to strength manufacturing sector. He said tariff structure on synthetic yarn has also been rationalized fulfilling the longstanding demand from the textile sector.
He said over thirty active pharmaceutical ingredients and first aid bandages industry have been exempted from customs duty to bring production cost down at local level.
Miftah Ismail said Prime Minister Shehbaz Sharif wants to extend maximum relief to the people, especially the poor during these difficult times.
For this purpose, the government has taken several steps to provide subsidy and assistance. He, however, said that the continuation of this will require more resources.
To achieve this, there is a need to impose special tax on higher income earnings in order to divert the resources to the poor people.
Miftah Ismail said our budget philosophy is to enhance agriculture production, especially the edible oil in order to reduce agricultural imports, separately. We need to promote industries to bolster exports and earn valuable foreign exchange. This, he said, will help address the issue of balance of payments on permanent basis.
ENERGY SECTOR:
The Finance Minister said that the energy sector has pivotal importance for the people as well as the industries and trade. For these sectors and the people we gave an additional subsidy of 214 billion rupees. He said 573 billion rupees have been earmarked in the next financial year so that the people could afford the electricity in the harsh weather of summer. He said we released 248 billion rupees for the payment of outstanding amounts in the petroleum sector and 71 billion rupees will be provided in the next fiscal year. He said we will soon announce the new gas tariffs which will be aimed at providing gas to the industries at competitive rates which will help in bolster exports.
EDUCATION SECTOR:
The Finance Minister said we have earmarked 65 billion rupees in the current budget for Higher Education Commission. In addition 44 billion rupees have been allocated for the development schemes of the HEC which is 67 percent higher than the previous year. He said this is manifestation of our commitment towards the youth. He said we are encouraging the provinces to fully fulfill their responsibilities regarding promotion of higher education in the coming years. The HEC budget envisages five thousand scholarships for the students of Balochistan and tribal districts. He said a separate scholarship scheme has also been included for the coastal areas of Balochistan.
The Finance Minister announced to provide one hundred thousand laptops on easy installments to the students across the country. Funds have also been allocated for provision of state of the art equipment to upgrade education of engineering and technology.
INDUSTRIES-TRADE:
Finance Minister Miftah Ismail said an industrial policy is being introduced in collaboration of Asian Development Bank to strengthen industrial base of the country. He said the Prime Minister has directed to immediately clear all claims of exporters. At present, an amount of 40.5 billion rupees is payable to them and we will pay this amount forthwith. Despite, financial difficulties sales tax refunds are also being released immediately. He said that Industrial feeders have been exempted from load-shedding to ensure uninterrupted power supply to the industrial sector.
Miftah Ismail said a new strategy is being evolved for the promotion of investment in the country. He said the policy is aimed at providing an enabling environment to the investors by doing away with the complex procedure. He said that our government will bring reforms in dispute resolution mechanism to facilitate domestic and foreign investors. He said that it will be ensured that this mechanism is simple and effective. For this purpose, best international practices will be adopted. He said these reforms will be introduced in consultation with judiciary so that these could be implemented immediately.
AGRICULTURE-YOUTH:
Miftah Ismail said that 21 billion rupees have been earmarked to enhance production of crops and livestock. He said that Ministry for Food Security has prepared a three year growth strategy in collaboration with Planning Commission and provinces. This strategy is aimed at enhancing agri-production, making the farmers prosperous, promoting smart agriculture and self-reliance.
The Finance Minister announced formation of National Youth Commission in order to exploit the potential of the youth. He said various schemes have been proposed for the youth. He said a coordinated system is being introduced to enhance the role of educated youth in the country's development. He said more than two million job opportunities will be provided to the youth through youth employment policy. He said a scheme will also be started to promote youth entrepreneurship under which interest free loans of up to five hundred thousand rupees and loans up to twenty-five million rupees will be provided on easy installments. He said that twenty-five percent quota has been fixed for women in this loans scheme. He said that women will be given training on priority basis in hi-tech in order to ensure the economic empowerment. He said youth development centres will be established across the country.
The Finance Minister said that a green youth movement will be started in order to engage the youth in activities aimed at environment protection. Funds will be set aside to provide laptops on merit and on installments besides 250 mini-sports stadium will be constructed in the country. He said that an innovation league will be introduced in order to enhance the capabilities of the youth. He said a talent hunt and sports drive programme will be framed for the youth in the age bracket of eleven and twenty-five years.
CULTURE/FILM INDUSTRY:
The Finance Minister said that the film has been given the status of an industry as per the film and culture policy 2018. He said a binding film finance fund is being established to promote this industry. He said a medical insurance policy is being started for the artists.
Miftah Ismail said a tax holiday is being given to film makers while tax rebate for the same period will be given to new cinema houses, production houses and film museums. Tax rebate of ten years will also be given for the export of films and dramas while income of cinema and producers is being exempted from income tax. He said a National Film Institute and Post Film Production facility besides, National Film Studio are being established at a cost of one billion rupees. He said foreign film makers will be given rebate for entering into joint ventures of films and drams at the domestic level. He said eight percent withholding tax is being waived off on distributors and producers. He said that custom duty exemption of five years will be given for the import of machinery and equipment for films and dramas.
He said that entertainment duty is being abolished and sales tax is being brought to zero for the purchase of equipment related to films and dramas. He was confident that these steps will help revive the film industry and encourage the new talent to join this field.
DEVELOPMENT SECTOR:
Presenting the development priorities, the Finance Minister said we will focus on the on-going projects so that the money spent on them is not wasted. He said that most of the funds are being spent for the development of Balochistan in order to bring at par with other regions. He said PSDP allocation for the provinces, Azad Jammu and Kashmir and Gilgit Baltistan has been enhanced to 136 billion rupees. He said water reservoirs are our top priority. He said additional amounts have been earmarked for the early completion of Mohmand and Diamer Basha dams as per the direction of the Prime Minister Shahbaz Sharif. He said road infrastructure connecting our ports with the Chinese border will be completed. He said emphasis will be given to the National Development and promotion of exports by accelerating work on Special Economic Zones and infrastructure under the CPEC.
Finance Minister said that infrastructure development has been our priority keeping in view the requirements of the country. For this purpose, 395 billion rupees have been allocated.
The Minister said a total amount of 183 billion rupees has been set aside for various projects pertaining to energy and water resources. He said that 202 billion rupees has been proposed for roads and ports. He said construction of the roads will be promoted in cooperation with the private sector.
SOCIAL SECTOR:
The Finance Minister said the government is working to achieve the targets set under the Sustainable Developments Goals. He said that 70 billion rupees have been allocated to serve the under privileged segments of the society and bring ease in the life of common man. Forty billion rupees will also be spent on other schemes aimed at uplifting the social sector.
Miftah Ismail said that 24 billion rupees have been allocated to provide better health facilities to the people and improve the capacity of health related institutions.
The Finance Minister said the government is focusing on the development of IT sector in order to boost its exports. 17 billion rupees have been allocated for this sector. He said 11 billion rupees has been set aside for provision of quality seeds to the farmers and bringing innovation and promoting use of latest machinery in the agriculture sector.
The Minister said that development of necessary infrastructure for the Special Economic Zones is part of budgetary proposals for the next fiscal year. He said our aim is to enhance market share in the international markets. He said budget of five billion rupees have been proposed for investment in value added exports, minerals and other sectors associated with the industries.
The Finance Minister announced that a comprehensive plan is being devised to prevent tax evasion in the country.
He said one percent tax will be levied on the income or rent of the immoveable property with a value of 25 million rupees and above on the basis of fair market value formula. However, one personal residence of an individual will be exempted from this tax.
He said advance tax on sale and purchase of properties for filer is being increased from one percent to two percent while this ratio for non-filers will be five percent. For higher income persons or companies, two percent tax has been proposed on annual income of 300 million rupees or above.
Miftah Ismail said advanced tax on luxurious vehicles of 1600cc and above will be enhanced. Furthermore, two percent advance tax will be imposed on electric vehicles. Similarly, the rate of tax for non-filers has been increased from 100 percent to 200 percent.
He proposed to raise the existing tax ratio from 39 percent to 42 percent on banking companies. Advance withholding tax at the rate of one percent for filers and two percent for non-filers will be levied on sending money abroad through credit, debit and prepaid cards. However, this tax will be adjustable against payable tax.
The Finance Minister said austerity is the top priority of the present government. Reducing government's expenditure is part of this budget and we are taking concrete steps in this regard. He said there will be complete ban on purchase of vehicles. Except, development projects, there will also be a ban on procurement of furniture and other items. The petrol quota of cabinet members and government officials will be reduced by 40 percent. There will also be ban on foreign tours under government expense, except the important ones.
According to the vision of Prime Minister, the Finance Minister said a medium term macro economic framework has been prepared to put the economy on the path of development. He expressed the confidence that we will be able to put the economy in the right direction through this framework. He said our biggest challenge is to achieve growth without Current Account Deficit. Therefore at least five percent will be achieved without disturbing the balance.
Miftah Ismail said the GDP will be enhanced from 67 trillion rupees to 78.3 trillion rupees during the next financial year.
He said we are trying to reduce inflation by better fiscal and monetary policies. The inflation will be reduced 11.5 percent during the next fiscal year.
He said the tax to GDP ratio is estimated to the increase to 9.2 percent from the current 8.6 percent during the next financial year. He recalled that we had left this ratio at 11.1 percent in the year 2017-18. He said the overall deficit which currently stands at 8.6 percent will be gradually brought down. This will be brought down to 4.9 percent in the next fiscal year. Similarly, the overall primary balance which is currently -2.4 percent of the GDP will be improved to 0.19 percent.
The Finance Minister said the imports, which are expected to be 76 billion dollars during the current fiscal year will be reduced to 70 billion dollars in the next financial year. At present, exports are 31.3 billion dollars, which will be enhanced to 35 billion dollars in the next fiscal year. The current account balance will be reduced to -2.2 percent of the GDP from the current -4.1 percent.
The remittances which will remain 31.1 billion dollars during the current fiscal year are expected to rise to 33.2 billion dollars in the upcoming fiscal year.
Source: Radio Pakistan