The government on Wednesday gave a clear message to the rich to be fair to the country and pay due taxes as there would be no compromise on tax collection. Addressing a post-budget press conference along with Minister for Planning Makhdoom Khusro Bakhtiar, Minister of State for Finance Hammad Azhar and Chairman Federal Board of Revenue (FBR) Shabbasi Zaidi, Minister for Energy Umer Ayub, Advisor to Prime Minister on Finance Dr Abdul Hafeez Sheikh said that to balance expenditure and income, the government has set a challenging revenue target for next fiscal year.
The advisor said that the "rich have to be fair with the country" as their counterparts in other countries - India, Bangladesh and Sri Lanka - are paying more taxes than them. If the government annoys them in its effort to collect due taxes then the government is ready for their annoyance. The advisor said that it is unacceptable that exporters who continue to receive zero rating on their exports do not pay sales tax on domestic sales. He reiterated that there would be no change in the zero-rated status of the five major export sectors.
He said that as per government estimates, textile sector''s domestic sales are to the tune of Rs 1200 billion while their contribution to sales tax is only Rs 6-8 billion. "A sector that earns Rs 1200 billion and pays only Rs 8-10 billion tax is not acceptable," he said.
Hafeez Sheikh said that the government would bring about an improvement in refunds on the Bangladesh or China model and a plan to this effect will be shared with the business community and public soon. He further stated "we are removing filers and non filers distinction and non filers have to file returns within a period of 45 days if they purchase a vehicle or property otherwise the government will penalize and prosecute them and they would have to explain their source of income."
He claimed that the government has enhanced allocations for protection of vulnerable segments of society and development projects in next year''s budget.
Sheikh said that the government has doubled allocations for the social safety net with Rs 191 billion for next year as opposed to Rs 101 billion for the outgoing fiscal year.
The adviser said that Rs 216 billion has been earmarked in the budget as subsidy for those electricity consumers using less than 300units per month. He said this subsidy is aimed at protecting the poor and the vulnerable electricity consumers from a rise in power prices.
As regards the development budget, the adviser said the development allocation of federal government for next fiscal year has been increased to Rs 950 billion against Rs 550 billion for the outgoing fiscal year. The advisor said that development activities would help generate employment opportunities for the youth. The government, he said, has also announced separate packages for Karachi and Balochistan.
Hafeez Sheikh said that efforts have been made in the budget to reach out to the underdeveloped districts especially those in Balochistan as well as merged districts of FATA and Rs 152 billion has been budgeted for FATA districts. "We are also giving subsidies to the private sector on gas and electricity tariff and making loans available to them to help promote economic activity in the country," he said.
The adviser said the focus of the new budget is on three to four areas with limiting the external debt as top most priority followed by fiscal consolidation, protecting vulnerable segment of the society and austerity.
Hafeez Sheikh said the government has budgeted Rs2.9 trillion for interest payment on loans borrowed by the previous administrations and the present government inherited a debt of Rs 30 trillion.
Hafeez Sheikh said salary of government servants from grade one to 16 has been increased by ten percent, while those from grade 17 to 20 will receive a five percent raise, and there will be no increase for those in grade 21 and 22. Slabs of income tax for government employees have been rationalized and those earning Rs 50,000 per month will pay no tax and the new rates of income tax are half compared to those applicable prior to beginning of 2018-19.
The advisor while responding to a query stated that Rs 141 billion would be realized from privatization of two planned LNG plants, but had no definitive response to the question of the pending $800 million on account of privatization of PTCL.
Advisor further stated that the details of the IMF conditions would become clear within the next couple of weeks when Pakistan''s request for the bailout package would be considered by the Board of Directors.
The advisor said that the present government is ready for accountability of the money it borrowed during the last one year and respond to questions as to whether it was used prudently or not; he claimed the money was used to service the debt taken by previous governments and to stave off default.
Business Recorder asked the advisor if the defence loans taken during the last ten years would be securitized by the Commission announced by the Prime Minister, Finance Advisor stated that "it is premature to determine how the Commission will work. The picture would become clear after the Commission''s terms of reference are shared with the people".
Omar Ayub Minister for Power and Petroleum did not respond to the query about the exact increase in gas and electricity prices being envisaged from July 1, 2019.
"The exact impact of increase in electricity tariff is linked to the international market as the former government turned the energy mix upside down. The country''s energy depends on imported oil and gas," he added.
He further stated that a development package of Rs 152 billion has been earmarked for erstwhile FATA of which Rs 83 billion is meant for development of the area. This fiscal space of Rs 172 was created after the Armed Forces volunteered to a budget freeze and another Rs 50 billion slashed from the federal government''s expenditure.
"This is very important for our integration and national security. This space has been created with belt tightening so that we can start development work in erstwhile FATA," he said, adding that "we, as, Pakhtun are proud of our armed forces".
Fiscal deficit and current account deficit are two major issues, he contended and to deal with the two issues, the government is focused on export-oriented industry, which relies on electricity and gas as a major input. He said, the government will provide a subsidy on both electricity and gas to the export-oriented industry. The price of gas will be 6.5 cents per MMBTU and electricity 7.5 cents per unit.
Omar Ayub maintained that subsidies were created, negotiated with the IMF and approved, adding that the government is pro- growth. "The government is supporting export-oriented industry and safeguarding poor segments of society," he said. He, however, like in the past, shifted the responsibility of delay in tariff notifications to the PML (N) government due to which PTI government bore the burden of Rs 250 billion.
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