The country's economic growth, improvement in investment climate and populous measures are likely to remain key areas of focus for the government in the next budget, analysts said. The recent tax reforms package where the salaried class was given significant relief has set the tone of expectations of further relief in upcoming budget.
"However, we believe that tax and other populist measures could potentially be reversed or revised after general elections as the new government will want to set realistic targets amid external account concerns," leading analyst and CEO of Topline Securities Muhammad Sohail said. He expects that the country would get into another IMF programme in the second half of 2018, which is usually followed by shrinkage in fiscal balance.
He said that the government is likely to rationalize the Capital Gains Tax (CGT) on sale of shares for tax filers along with specific holding period. The government may also withdraw the 5 percent tax on market price of bonus shares in Federal Budget FY19. "We expect corporate tax rate of 30 percent to be maintained in this year's budget", he said adding it is expected the government to continue with 3 percent of super tax (4 percent for banks) in this budget as well.
Real estate measures announced in the recently announced tax reforms package are expected to be part of Finance Bill. This will help bring unaccounted for wealth in the economy that will have positive implications to other sectors including stock market. Sector wise Consumer, Chemical, Pharmaceutical and Fertilizer may be the beneficiaries of the budgetary measures, he said.
Going forward, he said, local politics (Former Prime Minister Nawaz Sharif's court cases), smooth transition of democratic government, success of recently announced amnesty scheme, and external account situation will likely set the tone of Pakistan equities.