ISLAMABAD: Finance Minister Muhammad Aurangzeb said on Tuesday that the government is making positive progress for the new International Monetary Fund (IMF) programme and pledged to bring about structural reforms to fix the low tax base, energy sector and SOEs reforms.
Winding up debate on budget for the next fiscal year in the National Assembly, Aurangzeb said government efforts would be to make it the last IMF programme for Pakistan by implementing a homegrown reforms plan. The finance minister said homegrown structural reforms are important to steer the country out of the current economic situation.
Aurangzeb explained that the government’s objective is to increase the tax-to-GDP ratio to 13 percent, reform the energy sector and SOEs and take ahead the privatisation process besides moving on from a government-driven economy to a market-driven economy.
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While acknowledging the input of all the stakeholders to the budget, he said all the stakeholders would be provided update on a quarterly basis.
He said the government has decided to adopt some recommendations of the Senate Standing Committee on Finance which included that the non-filer will be provided an opportunity to be heard in person before implementation of SIM blocking and travel ban with respect to income tax; an explanation has been added in the declaration of the foreign assets as well as of the dependent wife’s assets. He said sales tax, income tax and federal excise duty (FED) default surcharge Kibor+3 percent or 12 percent whichever is higher has been included.
The finance minister said this has been agreed that an increase in penalty for those filing late income tax return has been linked to habitual late filers.
“If the taxpayer in any of the past three years filed its tax return timely would not be facing increase in tax rate.”
He said tax exemptions for stationery items have been maintained and existing reduced sales tax rates on heavy electric vehicles (HEVs) has been maintained under the 8th Schedule of the Sales Tax Act.
The minister said under the Export Facilitation Scheme (EFS) 2021, sales tax zero rating on local supply is not being abolished.
The government has also extended the date from June 15 to December 31, 2024, for the transfer of cases of sales tax and FED cases from Commissioner Appellate to Appellate Tribunal has been extended from 16 June 2024 to 31 December 2024.
The proposal for improvement in the drafting of Section 25 of the Sales Tax Act, 1990, has been accepted.
The finance minister added that agriculture, health and education are government’s priority and the government has tried to provide every possible protection to agriculture, health, education and to renewable energy.
He said the proposal for retaining sales tax exemption on supplies made to the charitable and welfare hospitals and sale tax exemption to professors are being seriously reviewed. He stated that the FBR’s role in the future is very important and the prime minister himself would be overseeing the digitisation and policy reforms of the FBR.
The FBR has taken the decision traders and retailers and distributors would be brought into the tax net and in this regard big step included a huge increase in tax rates under Section 236G and Section 237H for non-filers.
This would be implemented for all sectors from July 1, 2024.
He said the government expenditure and unnecessary expenses would be reduced to decrease the budget deficit and future pension expenses would be reduced by reforming the pension and the size of the federal government would also be reduced and measures would be taken to plug the wastages.
A committee headed by the finance minister would put up proposals to the prime minister after a detailed view either for the merger of federal ministries and abolishing or devolving to the provinces.
He said he has proposed a fiscal pact in the speech and in this regard federal government along with the provinces intends to increase the country’s resources besides discussion would also be held for sharing of the expenses of devolved subjects.
With regard to the defence budget, he said armed forces have always stood for the defence of the country as well as internal and external conspiracies and national security is the government’s critical priority and this is the reason that despite all the fiscal constraints the government would ensure provision of all needs of armed forces. About the 2nd phase of the CPEC, he said that fool-proof security is important for the Chinese citizen and the government is taking measures in this regard.
He said reduced price of electricity and policy rate would help revive the industrial activity in the country
He said the PSDP’s 81 percent resources have been allocated for ongoing projects and promotion of public private partnership is an important priority of the government.
The finance minister also announced three basic honorariums for the officers and staff of the National Assembly and Senate.
NNI adds: The minister said that the government had decided to tighten the noose around shopkeepers and retailers.
He said action will be taken against the retailers from the 1st of July failing to register them with FBR Tajir Dost Scheme.
Copyright Business Recorder, 2024