KARACHI: The budget for the next fiscal year, which will be announced on June 1, will be a professional and business-friendly budget, beyond any political consideration, federal Minister for Finance and Economic Affairs Dr Abdul Hafeez Shaikh said on Sunday. He was addressing members of the Federation of Chambers of Commerce and Industry (FPCCI).
He said: "We are negotiating with political parties as well as business community to present a comprehensive budget for fiscal 2012-2013. The FBR and the ministry of finance's team is preparing the budget in the light of proposals sent by the business community. It will be on merit and a professional budget without any political thoughts," he added.
He said that the country's economy was growing at a healthy rate and GDP growth "will be 3.7 percent by the end of the current fiscal year against 3.5 percent in the previous fiscal year".
Replying to a question raised by members of the business community, he said that Pakistan's Constitution did not allow the federal government to impose and collect levy on agricultural sector.
"According to the Constitution, imposing tax on agricultural sector is the responsibility of provincial governments and all four provinces have already imposed levy on this sector. However, they are not making serious efforts to collect the same," he added.
The minister said that taxpayers would be facilitated in the next fiscal year budget 2012-2013 and a part of these efforts, 17 slabs of income tax would be reduced to facilitate them.
"We are here with an open mind to listen to you and your budget suggestions. They will assist us to prepare a business- and public-friendly budget," he said. Presenting the budget was the government's duty but private sector was a major stakeholder, which had a key role for revenue generation and national development.
"I assure the business community that all their major issues will be addressed in the next budget to facilitate them in the larger interest of the country," Hafeez said.
Like this year, fiscal discipline was the main objective of the next budget, aimed at curtailing subsidies and expenditures. During the current fiscal year, current expenditures had been cut by 10 percent through serious efforts made by the ministry, he pointed out.
"We don't have any plan to introduce (any) new tax or raise the current tax rate in the next fiscal year's budget (2012-2013)," he said. However, he said, "I request the business community not to support elements involved in tax thefts, causing losses of billions of rupees to the national exchequer".
Talking about tax relief, he said that although there would be no new tax in the next budget, significant cut in income tax and sales tax would be announced to provide relief to lower-income groups.
"To provide relief to salaried persons, it has principally been decided to reduce the 17 slabs of income tax without any increase in the current rate," he added.
Dr Hafeez Sheikh said that under the NFC Award, provinces were getting 70 percent share of the total revenue and nearly Rs800 billion extra had been paid to four provinces for social development. With these efforts, Balochistan's budget surged to Rs90 billion from Rs 40 billion after the NFC Award.
Commenting on initiatives for the poor, he said that the government had allocated Rs50 billion under the income support fund in the current fiscal year's budget to support the poor. This year, he said, government was allocating a healthy amount for poverty reduction.
About the energy issue, he said that the government was seriously trying to resolve the energy crisis. As part of these efforts, he said, nearly Rs1,000 billion had been spent on account of subsidy for power sector over the last four years. During this year, he said, the government spent Rs100 billion on power subsidy.
The minister said that because of the gas shortage, the government imported 1.2 million tons of urea to meet local demand and billions of rupees were paid to sell imported urea at a reasonable price.
He said that economic and financial problems could be resolved by an increase in tax collection. Therefore, he said, some measurers would be taken to broaden the tax net.
The government is already pursuing a policy to reduce tax burden on taxpayers. Under this plan, customs duty on 24 items had been reduced during the previous years.
"Till fiscal year 2010, salaried persons were paying income tax on salary up to Rs100,000. However, we provided relief and extended it up to Rs350,000. With this move, nearly 1.2 million taxpayers got relief," the minister said.
Earlier, there was regulatory duty on 397 items. According to him, instead of increasing revenue, the quantum reduced. "Now there is regulatory duty on just five items."
The government, he said, was also planning to remove federal excise duty in three years. Last year, some reduction was initiated in the previous year's budget.
"The government is taking several measurers to reduce unemployment. Revival of large-scale industry is necessary in this regard. Therefore, the ministry is also considering some positive measurers for the establishment of large-scale manufacturing units," the minister said.
Explaining steps being considered for broadening the tax net, he said that wealthy people would be brought in (the tax) net in the coming budget. However, the government will try not to further increase the tax burden on existing honest taxpayers," he said.
The government, he said, was also focusing and facilitating the private sector, which could play a vital role in national development. He said that economy was gradually improving and over the past year, the country's exports surged to $23 billion, while average monthly remittances crossed one-billion-dollar mark.
Since May 2010, the government did not get anything from the IMF, but Pakistan repaid $800 million to the Fund. In addition, tax collection had posted a positive growth of about 25 percent during the current fiscal year, he said.
Chairman FBR Mumtaz Haider Rizvi, Secretary Finance Abdul Wajid Rana, leaders of business community, including Tariq Saeed, FPCCI's acting president Shaikh Shakeel Dingra, Mian Iftikhar, Mian Zahid, Khalid Tawab, Shaikh Manzar Aalam, Zubair Tufail and Atiq Mir also spoke on the occasion.
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