Fiscal deficit to be reduced, tax net to be increased

Terming the federal budget pro-poor, Finance Minister Dr Abdul Hafeez Sheikh has said that tax collection system will be improved for income generation and fiscal deficit will be reduced by four percent in the next fiscal year.

Winding up the budget debate in the Senate, he said that the government has fixed the target of $22 billion for its exports and hoped that the export would cross the target and reach up to $25 billion. The government has planned to simplify the tax collection system by introducing only two forms of taxes instead of others included sales tax and income tax, he said.

The minister said that the national economy was moving in right direction and an estimated one million dollars were being received as remittances every month while foreign exchange reserves were now over $17 billion.

He said it has been decided that the government will not put any burden on those who are in tax net while those who are avoiding to pay taxes will be included in the tax net. With the help of the National Database and Registration Authority (NADRA) around 700,000 affluent people have been searched out who will be included in the tax net, he said.

He said that 77,000 people have been issued notices out of which 10,000 people have sent their replies while 1000 have added them in tax net. He said several incentives have been planned for private sector in the budget to encourage investment in the country. He said that provinces can impose agriculture tax as everybody must share in resource mobilization.

He expressed the hope that there will be progress at this point as well. He said while in planning of further revenue generation, the government has taken care of the problems of common man and avoided to impose tax on items of daily use including food items. He said that out of 397 items 392 items have been completely exempted from regulatory duty.

He announced that there will be complete exemption of federal excise duty on 97 items within two years. He said that the federal excise duty will be exempted from 17 items during next fiscal year while it will also be reduced on some items the same year. The minister said that additional amount of Rs 700 billion will go to provinces due to the Finance Commission Award announced last year which will be used for the welfare of people in sectors like health, education and provision of soft drinking water to them.

He said that with the utilization of this huge amount service delivery system will improve and provinces’ resources will enhance. He said overall the provinces have increased 32% budget in health and education sector for the next fiscal year. He added though health and education are now provincial subjects but the federal government has decided to continue on-going programmes of these sectors.

He said the federal government has also continued further funding for the Higher Education Commission. He said an amount of Rs 65 billion has been allocated for Benazir Income Support Programme (BISP) for next fiscal year against the amount of Rs 35 billion which was allocated for current year. He said cash amount is directly transferred to four million people of the country for their wellbeing under BISP.

He said the programme is moving in a transparent manner as there is no role of middle man in the transaction of the amount. He said an amount of Rs 2 billion has been allocated for Pakistan Bait-ul-Mal while around two million people will get assistance from macro finance scheme.

The minister said an amount of Rs 730 billion has been allocated for next fiscal year under Public Sector Development Programme against the current allocation of Rs 300 billion. He said this amount will be used for completion of several development projects aimed at changing the life of common man and for social development.

For the first time the government has raised allocation for development in far-flung and neglected areas of the country including tribal areas and affected areas of Khyber-Pakhtunkhwa besides Balochistan and Gilgit-Baltistan. He said all institutions of the country are running smoothly as standing committees are active in the country and media is free and independent to report anything while a central leader of a political party is heading the country’s major body which is responsible for accountability of the government.

He said when the present government came into power the country’s economy was in worst condition as fiscal deficit reached at 7.6%, foreign exchange reserves were Rs 6 billion and inflation rate was 25%. He said despite several challenges and worst economic conditions, the government had made difficult but strong decisions to improve the economic condition of the country due to which fiscal deficit decreased to 6.3% from 7.6% last year.

He said the government has planned to further decrease the fiscal deficit to 4% for next fiscal year. He added besides other steps the government had freezed its own expenses and made improvements in the tax collection system. He said though these steps were very hard and there were several hurdles in this way but the government had successfully implemented its policy for economic revival.

He said the government had to face economic loss due to heavy floods that resulted loss of lives and property and around 20 million people badly affected from floods in areas including Noshera, Charsada, Rajanpur, Jacababad, Tandu Allahyar and Jaffarabad. He said the floods also destroyed 1.6 million houses in the affected areas besides damages to schools, hospitals, oil refineries and roads infrastructure.

He said according to international world the economic loss from the flood was $10 billion. He added an estimated 2% growth rate was also affected due to floods. He said 30,000 civilians and 5,000 army personnel and officers lost their lives in combating terrorism and the government’s expenditure is increased due to its commitment against terrorism.

He said the government has included some other sectors in tax net including textile, surgical equipment, sports items for income generation. He said that the government has made consultation with all concerned stakeholders including chambers, industries and finance committees of National Assembly and Senate in preparation of budget.

He said that the Pakistan Muslim League-N was also approached to get their inputs in the preparation of the budget and it had spent 45 days with 200 hours with the leaders of PML-N for consultation on budget.