PPP gives 25 recommendations to improve budget

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Pakistan People’s Party senior leader Raza Rabbani on Monday said his party had presented 25 recommendations to improve the proposed budget 2013-14 and make it more effective and people-friendly.

Addressing a press conference at Parliament House, he said the PPP had suggested that the anticipated revenue expected from auction of 3G licences, coalition support fund, outstanding dues from Etisilat should not be included in revenue receipts of the annual budget.

It was also suggested that only those projects should be included in the PSDP that have undergone a pre-project economic appraisal and an environment impact assessment, as well as a cost benefit analysis.

“The block allocation of Rs 115 billion in the PSDP for development initiatives should not be included without specifying approved projects and that only approved projects should be included.”

Rabbani said 30 percent expenditure cut in all ministries announced by the prime minister must be reflected in the allocated current expenditure of the budget.

“Distortion in the income tax regime must be rationalised, especially in case of the capital gains tax. PSDP allocations should be prioritized on the basis of national economic and strategic importance as well as balanced development in all provinces and regions.”

He said all those clauses presented in the Finance Bill, 2013 that were not within the purview of a money bill should be dropped and federal excises duties levied on services should be withdrawn.

“Income support levy should either be withdrawn or amended as a tax so that revenue collected goes to the federal divisible pool.”

He said allocation for health and education projects that were the constitutional responsibility of the provinces should be dropped, adding that minimum wage should be increased to Rs 12,000.

The increase in the standard rate of sales tax from 16 to 17 should be withdrawn and imposition of GST on milk projects, including packaged milk, which is a hygienic alternative to raw milk and an everyday items of consumption by many household, be withdrawn or the rate reduced.

“Differential rates of sales tax create incentives for evasion. The concept of further tax on supplies from and sales to unregistered persons will increase the arbitrage within the system with fake from companies being formed to benefit from the 2 percent arbitrage.”

“Instead it is proposed to make registration under sales tax act compulsory for all persons making payment against supply of taxable goods.”

He said the amendments relating to sales tax for goods manufactured or produced in various districts of KP as well as in FATA may be withdrawn.

“These areas, being severely underdeveloped and disadvantaged may continue to enjoy exemption from sales tax.”

“The finance bill seeks to propose certain amendments for salary taxation. The proposed amendments are regressive in nature for example those with gross salary incomes of Rs 600,000 will see their tax liability increase by 25 percent, while those with salary of Rs 4,000,000 will see their tax incidence reduce by 18.4 percent. These amendments may be withdrawn,” Rabbani said.

The finance bill had proposed advance tax collection at the rate of 0.5 percent under Section 236h. This may be increased to one percent to bring it in line with minimum tax rates for manufactures, he said.

“The finance bill proposes to require banks to make arrangements to provide the FBR with online access to their central databases. It is proposed that this provision be withdrawn pending reform of FBR to ensure privacy and data integrity and to protect against coercion and corruption. Insertion of clause 25 in the Finance bill 1013 may be withdrawn.”

The PPP leader said the finance bill had proposed that parameters for selection of audit through computer balloting by the FBR shall remain confidential. “This is against the principle that the tax system should be fair, transparent and easy to understand. Taxpayers are entitled to know what the parameters for selection of audit through computer balloting are. FBR must make these public.”

Rabbani said the finance bill had proposed to reduce minimum tax liability of those engaged in distribution of cigarettes, and cigarette smoking has scientifically been proven to be injurious to health. The proposed change may be withdrawn.

“The medium-term budgetary statement presented as part of the federal budget includes three year rolling targets for macroeconomic indicators. In order to encourage broadening of the tax base, targets for number of taxpayers filing income tax return may also be set.”

A pre-budget session of parliament should be held at least one month before the actual budget is presented in parliament in which all budgetary proposals are placed before the House, he added.

“The budget of each ministry should be placed before the respective standing committee of parliament at least six weeks before the budget session. A comprehensive national policy for Pakistan’s food security, agriculture and research development must be framed and included in both the government’s economies vision and medium term budgetary statement, detailing concrete incentives, measures and interventions for the sector.”

To a question, Rabbani said the PPP would oppose privatisation of national enterprises.