Pension challenge: government won''t be able to foot the bill: top MoF official

Secretary Finance Tariq Bajwa said Saturday that the government would not be able to meet the expenditure on account of pension bill - presently Rs 245 billion - in coming years. "Pension bill is becoming such a burden that government would not be able to meet the expenditure in next few years" he said in response to Senator Siraj-ul-Haq proposal that pension of senior citizen should be increased to 80 percent.
Finance committee chaired by Saleem Mandviwalla considered recommendations of the senators to the Finance Bill 2017 during the two sessions and was in total inconformity to Senator Azam Khan Swati recommendation "to slash budget allocation of President House by 30 percent and Prime Minister House by 15 percent to follow austerity measures as claimed by the government."
Senator Siraj-ul-Haq recommended that pension of senior citizen should be increased by 80 percent and for those of above 70 years should be given Rs 10,000 per month under the head of senior citizens allowance. However, Secretary finance stated that "pension bill has increased to Rs 245 billion," adding that in case of business as usual, it would be difficult for any government to pay the pension bill in next few years. The Federal Board of Revenue (FBR) also informed the Committee that political parties are being granted exemption in tax on their income to resolve the problem created after some tax officials had issued notices to them. Political parties had neither paid tax in the past nor going to pay tax on their in the future, he added. Additionally, he stated that such exemption was also provided in other countries particularly in India.
The amendment proposed in the Finance Bill stated "The income derived by political parties under the political parties Order 200 - with the Election Commission of Pakistan (ECP) will be exempted from tax". Member Inland Revenue (Policy), Dr Muhammad Iqbal said some tax officials had issued notices to the political parties last year and exemption on income of political parties was proposed to resolve the issue.
The committee accepted Senator Farhatullah Babar proposal to allocate Rs 10 billion for implementation of FATA reforms and decided to recommend it to the government. Babar also proposed that a victim support fund should be set up to support the families of those who had lost their lives in terrorism and suggested that salary of government employees should be increased by 20 percent. The committee was in agreement to these proposals.
Senator Syed Muzaffar Hussain Shan recommended that the sales tax on supply of locally manufactured tractors be reduced from 5 percent to 2 percent and sales tax on the locally manufactured machinery and equipment should be abolished.
The committee accepted Muzaffar Shah''s proposal to abolish GST on locally manufactured diesel engine and custom duty and sales tax on its imported components. A host of recommendations were submitted by him and other senators regarding agriculture sector but secretary finance stated that most of them have already taken care of in the budget. Another recommendation that "all such departments should be granted 10 percent concession on electricity bills for the next three month, which show 15 percent reduction in electricity use." The Finance Division has agreed to weigh the feasibility of the proposal.