Budget approved by NA ahead of fresh IMF loan
- The approved budget includes several amendments from the original proposal presented on June 12
ISLAMABAD: Amid strong protests by opposition MPs, the government on Friday passed Federal Budget 2024-25 from the National Assembly – ahead of crucial talks with the International Monetary Fund (IMF) – with specific amendments, but further enhancing the taxes and no relief to the taxpayer.
The Finance Bill, 2024 – the total outlay of the federal budget for the fiscal year 2024-25 is Rs18.877 trillion – sailed through the lower house after a clause-by-clause reading, incorporating specific amendments moved by Finance Minister Muhammad Aurangzeb Khan, while all the amendments from opposition members were rejected.
The approved budget includes several amendments from the original proposal presented on June 12, 2024, as the government made the following changes in the Finance Bill 2024.
The reduced tax rates for hybrid vehicles will continue until June 30, 2026. Vehicles with engine capacities up to 1800cc and between 1801-2500cc will be taxed at 8.5 per cent and 12.75 per cent, respectively.
Contrary to expectations of a reversion, the Federal Excise Duty (FED) on cement was increased from Rs3 per kg to Rs4 per kg.
The sales tax benefits for erstwhile Fata/Pata were extended for another year.
The exporters will now be subject to the standard corporate tax rate of 29 percent plus applicable Super Tax, instead of the previous one percent tax on export turnover.
The individuals or the association of persons (AoPs) earning upwards of Rs10 million per year will also have to pay a 10 percent surcharge on their income tax amount.
Despite severe criticism from the opposition, the government increased the levy on petrol and diesel from Rs60 per litre to Rs70 per litre.
However, the finance minister assured the house that it would be increased gradually and would not be imposed at once.
“Rs50 per litre levy would also be imposed on light diesel oil and kerosene oil, while Rs70 per litre levy would be applicable on high-octane,” he added.
The house also approved an amendment proposed by the Pakistan People’s Party (PPP), a key ally of the ruling coalition, to increase the salaries and allowances of the legislators.
Abdul Qadir Patel of PPP said that the amendment is aimed at increasing the perks and privileges for members of parliament.
The amendment says that “the unauthorized air tickets and travel vouchers to which a member is entitled shall carry forward to next financial year and not lapse on end of a financial year.”
“A member [parliament] and ex-member shall be entitled to the same medical facilities as are admissible to a BPS-22 officer of federal government in all government hospitals in federal capital and provinces as well as private hospitals as may be notified by the federal government.”
As a result, the travel allowance for assembly members has been raised from Rs10 to Rs25 per kilometer. Besides, unused annual airline tickets for parliament members will now carry over to the following year instead of being canceled.
The number of annual travel vouchers has also been increased from 25 to 30.
In yet another huge favour to lawmakers, the responsibility for determining the salaries and allowances of parliament members has been shifted from the federal government to the finance committee of the respective house.
At the onset of the budget, Minister of Finance Muhammad Aurangzeb Khan declared the budget 2024-25 as growth budget, saying it was based on a well-thought-out strategy to boost economic growth.
Recalling Prime Minister Shehbaz Sharif’s statement that “it will be the last IMF bailout,” the finance minister said the budget for the next fiscal year was aimed at narrowing the fiscal deficit by expanding the government’s revenues and cutting unnecessary expenditures.
He reiterated the government’s commitment to increasing the tax-to-GDP ratio to 13 percent, which currently stands at a low 9.5 percent.
The minister claimed that the country had achieved macroeconomic stability, adding the economic indicators, including the current account, fiscal deficit, inflation, and foreign exchange reserves, were stable and under control. He outlined the government’s plan to continue this economic stability into the next fiscal year, aiming to lead the country towards sustainable economic growth.
He also called for reconstructing and digitizing the Federal Board of Revenue (FBR) to ensure high GDP target, adding the concept of non-filers would be eliminated from the tax system, making it mandatory for everyone to pay taxes.
He expressed the government’s resolve to curb tax evasion and expand the tax net, particularly targeting retailers and the real estate sector. He said that the current account deficit had decreased, the fiscal deficit was under control, and the country had foreign reserves of $9 billion, providing an import cover for two months.
He highlighted a significant reduction in inflation, from 38 percent to 11 percent, and sustained food inflation at two percent. He said that no tax had been imposed on the solar.
Responding to the opposition’s criticism for taxing the stationery, books and medical equipment, he said stents, surgical items, books, pens, printing, and other stationery items and in erstwhile Fata and Pata regions had been granted tax exemptions for a year.
He said tax exemptions could not be granted for packaged milk that did not meet quality standards, adding tax exemptions for education and health sectors were provided despite the challenging economic conditions.
The opposition leader in the National Assembly, Omar Ayub, said that relevant stakeholders particularly the opposition were not taken on board while preparing the budget.
“The finance bill fails to address the critical economic challenges faced by the country and has been drafted without adequate consultation with the key stakeholders,” he added.
He said that the budget was prepared by the economic hitman and it gives no relief to the common man, adding “We reject the budget as it will further increase the skyrocketing inflation in the country.”
Earlier in the day, while responding to PTI-backed SIC lawmakers, Prime Minister Shehbaz Sharif has said that Rs590 billion have been given to Khyber-Pakhtunkhwa over the years to augment its capacity in the war on terrorism.
Responding to the points of the opposition in the National Assembly, Prime Minister Shehbaz Sharif recalled that Khyber-Pakhtunkhwa was given an additional one percent in resources in National Finance Commission (NFC) Award, agreed upon back in 2010.
However, he regretted that counter-terrorism department has yet not been established in KP.
Meanwhile, after passage of the bill, the house approved 53 and 25 supplementary grants for the FY2022-23 and FY2023-24, respectively.
The house also approved 25 regular and technical supplementary grants for the fiscal year 2023-24 after a voice vote in the house.
Copyright Business Recorder, 2024
Comments