Federal Minister for Finance and Revenue Muhammad Aurangzeb on Thursday addressed the concerns of stakeholders regarding the budget for fiscal year 2024-25 presented before the National Assembly a day ago.
Addressing media persons, Aurangzeb said widening the tax base was essential, and a priority.
“The current tax-to-GDP ratio, which stands at a sub-par 10%, is simply unsustainable. In three years, we want to enhance this tax-to-GDP ratio to 13%,” he said.
“We seek to end the undocumented economy and digitise finances.”
Regarding the Petroleum Development Levy (PDL), which is proposed to be enhanced from Rs60 to Rs80 per litre, Aurangzeb said the increase would be gradual during the next fiscal year.
Key highlights of Budget 2024-25
“The PDL will be linked to international oil prices,” he said.
On salaried persons facing higher taxation, the finance minister said the government has kept empolyees earning up to Rs600,000 a year exempted. “Similarly, the top slab of 35% has also been kept unchanged.”
“However, we have made some changes in the tax slabs,” he said, adding that non-filers will see an increase in “tax on transaction”.
Aurangzeb said the government wants to end the concept of non-filers.
The federal minister said it is important to bring the retail and wholesale segment into the tax net to widen the tax base.
“Back in April, we initiated registration of retailers on a voluntary basis. From July onwards we will start imposing taxes,” he said.
At present, Aurangzeb said cash to the tune of Rs9 trillion remains in circulation. “This shows the weight of the undocumented economy,” he said.
The finance minister shared that the Export Refinance Scheme is being shifted from the State Bank of Pakistan (SBP) to EXIM Bank. “We have made it mandatory that a huge chunk of refinance fund shall be provided to the SME sector,” he said.
Budget 2024-25: IT sector unhappy with proposals
On the IT sector, Aurangzeb said that the country’s IT exports have reached $3.5 billion, which the government aims to take them to $5 billion.
“Our focus is to give as much facility to the IT sector,” he said.
Inflation target
On the inflation rate targeted at 12% for the upcoming fiscal, Secretary of Finance Imdadullah Bosal said the rate is realistic.
“The policy rate remains at 20.5%, which is considerably high leading to demand compression,” he said.
Meanwhile, on the issue of privatisation, Aurangzeb said the government is working with all stakeholders.
“Two assets namely PIA and Islamabad Airport are already at play.
PIA sell-off: 6 companies/consortiums pre-qualified for privatisation process
“Both these transactions will be completed by August. As we complete the transaction of Islamabad Airport, the PM has directed us to concurrently prepare the documentation of Karachi and Lahore airports,” he said.
On negotiations with the IMF, Aurangzeb reiterated that the talks for a new programme are moving in a positive direction. “However, I cannot say much until we reach a staff-level agreement (SLA),” he said.
“We are hopeful to reach the SLA with the IMF by July,” he said.
Budget 2024-25: Pakistan eyes over $20bn in external financing
The finance minister quashed the impression that the government’s coalition partner, Pakistan Peoples Party (PPP), was not on board with the budget proposals.
“We give budget presentations to all our partners, they were taken on board. Yesterday, you saw their representation in the parliament, when the budget was being presented,” he said.
On reducing the government expenditure, the finance minister said authorities are working on shutting down some ministries, which will be noticed in the coming months.
Dubai leaks
Meanwhile, talking about Dubai Leaks, Chairman Federal Board of Revenue (FBR) Asim Ahmad said he has been assigned to brief the Ministry of Finance in this regard.
“We have imposed taxes, and Rs6 billion cases are in appeals. However, we can’t divulge their names due to confidentiality reasons,” he said.
“We will reintroduce the POS scheme and price draw scheme,” he shared.
Meanwhile, while answering a query, the finance minister admitted that the current policy rate regime and energy prices are creating hurdles for the industrial sector.
“The policy rate is coming down, and with a decline in inflation, we will see a further decline in the policy rate. Whereas, on energy prices, we will hear good news soon,” he said.
Prime Minister Shehbaz Sharif-led coalition government’s Finance Minister Aurangzeb announced Pakistan’s federal budget 2024-25, targeting a modest 3.6% growth for the coming fiscal year, as Islamabad looked to appease the International Monetary Fund (IMF) and balance its burgeoning books with higher taxation.
The salaried group emerged frustrated, while capital markets rejoiced at ‘status quo’. It was the real estate and IT sectors that were left disappointed. Government employees were offered raises, while pensions also increased.
Minimum wage was enhanced to Rs37,000, and some proposals discussed privatisation and the energy sector.