Perception of election-specific budget dispelled: Relief, tax measures to abate supplementary grants

A day after unveiling the budget for the next fiscal year, the government's economic team on Saturday tried to dispel the perception that it is designed for mustering support in general elections and claimed it as realistic budget.
Speaking at the post-budget press briefing, Finance Minister Dr Miftah Ismail flanked by Advisor to Prime Minister on Revenue Haroon Akhter, secretary finance and chairman Federal Board of Revenue (FBR), in his opening remarks considered it necessary to explain that efforts have been made to strike a balance between relief and tax measures and resultantly "we do not hope a lot of supplementary grants."
Haroon Akhtar said he also wants to make one thing very clear in response to those saying that "budget is only give, give and give is not correct as a deep understanding and thinking was involved behind preparation of it and revenue measures are also involved."
However, Minister of State for Finance Rana Muhammad Afzal, who has been in the forefront government right present budget for the next fiscal year, was conspicuously missing in the press briefing.
The finance minister acknowledged the challenge of twin deficits with most serious one on external accounts but did not explain the government's strategy to deal with it. He said that it was impacting foreign exchange reserves and added that the State Bank of Pakistan's foreign exchange reserves have been added by $1 billion as the government has signed one billion dollars financing agreement.
The government is also banking on nominal growth and inflation as well as from recently undertaken devaluation of rupee against dollar to mobilize 11 percent growth in tax revenue and offset the net effect of Rs 91 billion on the Federal Board of Revenue's collection consequent to promised relief measures in income tax.
Miftah said that petroleum levy limit has been increased but claimed that there will be no change in the petroleum levy from July 1, 2018 and any decision to this effect will be taken by incoming government.
The finance minister stated that two committees, one for extension in export package and other on tax anomalies headed by Ghazanfar Bilour will also be constituted. He said the tax anomalies committee having members of key trade chambers will point out removal of anomalies. He said that issues in GIDC, which affect smaller provinces, will also be resolved.
He tried to avoid a question that out of the proposed Rs 2 billion for sport, Rs 1.5 billion have been proposed for construction of sport complex in the constituency of Minister for Planning, Ahsan Iqbal.
Akhtar said that budget entails revenue measures of one percent additional customs duty, one percent additional tax and two depreciations and these will also contribute to revenue mobilization. Additionally, he said excise duty on cigarettes and cement, and sales tax on steel were increased and steps have been proposed for making transactions of immovable properties above Rs 4 million as well as buying of vehicles for non-filers difficult. Akhtar said foreign assets discovery will make significant change and information sharing with banks has been enabled, which will be shared with NADRA for broadening of tax net. He said that rate for non-filers has also been increased.
"We have taken care of tax facilitation in the budget and proposed audit once in three years for individuals and companies and only salary class has been excluded from audit and their tax returns have been simplified with single-page return and power of supervisory clearance has been withdrawn from commissioner and handed over to headquarter to make difficult use of 40.B," he added.
He further stated that alternate dispute resolution committee's decision has been made biding and super tax has been proposed to be removed for corporation in three year and banking companies in four years with one percent reduction in each year. Tax on bonus shares has been withdrawn as during discussion whether to continue or remove it, pros outweigh the cons.
Reduction in corporate tax will continue for the next fiscal year, distribution of dividend has been reduced from 40 to 20 percent while duty on LED industry, firefighting equipments, coal industry and agriculture industry has been reduced.