PTI Govt unveils Budget FY20 with ambitious target and new taxes

Islamabad, June 11, 2019: Federal Budget with a total outlay of 7022 billion rupees for the next fiscal year, containing relief for the poor and measures for economic stabilization and fiscal discipline, has been announced.

Minister of State for Finance Hammad Azhar presented the budgetary proposals in the National Assembly on Tuesday evening.

The resource availability during the next fiscal year has been estimated at 7899.1 billion rupees against 4917.2 billion rupees in the budget estimates of the outgoing fiscal year.

The gross revenue receipts are estimated at 6717 billion rupees, showing an increase of 18.7 percent over the budget estimates of outgoing fiscal year.

After the share of provinces in gross revenue is transferred, the net review of federal government has been estimated to be about 3463 billion rupees for the next fiscal year.

The provincial share in federal taxes is estimated at 3254.5 billion rupees during the next fiscal year, which is 25.7 percent higher than the budget estimates for the outgoing year.

The tax revenue for the next fiscal year is estimated at 5822,160 million rupees, which reflects an increase of 33 percent over revised estimates of the current fiscal year.

Out of this, the FBR collection target is 5550 billion rupees, which will be 12 percent of the GDP.

The Minister of State announced ten percent ad-hoc relief for the government employees from one to sixteen scales and all personnel of the defense forces.

Five percent increase has been announced for public sector employees of 17 to 20 grades, while no increase has been made in the salaries of the government employees of 21 and 22 grades.

He also announced an increase of ten percent for all the pensioners. The minimum wage has also been increased to 17500 rupees.

The conveyance of disabled persons has been increased to 2000 rupees from 1000 rupees while special allowance of private secretaries attached with ministers and parliamentary secretaries has been enhanced to 25 percent.

The Minister of State said the Cabinet members have voluntarily agreed to 10 percent cut in their salaries.

Hammad Azhar said the PTI government came to power with new vision and commitment and to bring change in the lives of people, ensure merit and protect the vulnerable segments of the society.

The government took a number of steps to correct the course of economy.

Import duties were increased and imports reduced from 49 billion dollars to 45 billion dollars. Remittances increased by 2 billion dollars.

The circular debt was reduced by 12 billion rupees per month and it was brought down to 26 billion rupees from 38 billion rupees. Financial aid from China, UAE, and Saudi Arabia helped stabilize the economy. Incentives for the export sector were increased for three more years.

He said a program of 6 billion dollars has been agreed with IMF. This will help us gain 2 to 3 billion dollars loan more at very economical rates. Oil payment deferred facility from Saudi Arabia will also help reduce pressure on the government.

Seven billion dollars reduction in Current Account Deficit will be achieved this year, which will be 6.5 billion dollars next year.

The Asset Declaration Scheme will bring the undeclared assets into mainstream and help increase revenue of the government.

Tax policy has been separated from tax administration. Pakistan Banao Certificates were issued in order to provide benefit to Overseas Pakistanis to invest in Pakistan.

Billion Tree Tsunami and Clean and Green Pakistan initiatives were launched. In order to bring FATA into mainstream, special effort has been made.

He said in Naya Pakistan, the culture of tax evasion will be overcome. Civil and Defense authorities have agreed to voluntary reduce in their budgets.

Their budget has been reduced from 460 billion rupees to 437 billion rupees.

On protection of vulnerable segments of society, the Minister of State said a subsidy of 216 billion rupees will be earmarked for 75 percent consumers using less than 300 units of electricity.

The government has constituted a new ministry for the poverty alleviation.

A new ration card scheme for one million people is being launched to provide nutritious food to children and pregnant women. He said 80,000 people will be provided interest free loans every month.

Five hundred Kifalat Marakiz will be set up and disabled persons will be provided with assistive aids. Ehsaas homes will be constructed for elderly people.

The quarterly stipend of 5000 for BISP is being increased to 5500 rupees.

In 50 districts, girls’ stipend money is being increased to 1000 rupees from 750 rupees, besides expanding this service to 100 districts.

He said Sehat Sahulat Cards will be provided to 3.2 million people in 42 districts, while in the second phase 15 million people will be provided with these cards across the country including the tribal districts and Tharparkar.

Hammad Azhar said 93 billion rupees are being allocated for education, nutrition, health and clean drinking water.

The Minister of State said the government will not get loans form State Bank of Pakistan and we will focus on good governance and eradiation of corruption.

He said 200 billion rupees have been proposed for rail and roads; out of which 156 billion rupees will be spent through National Highway Authority.

For energy, the Minister of State said 80 billion rupees are being recommended; out of which 55 billion rupees have been earmarked for Dasu Hydropower project.

He said 60 billion rupees have been allocated for human development, and a record fund of 39 billion rupees has been allocated for higher education.

The Minister of State for Finance said an amount of 10.4 billion rupees for second phase of Quetta Development package will be earmarked as part of development of Balochistan.

He said a sum of 45.5 billion rupees will be spent on nine development projects in Karachi.

Hammad Azhar said employment creation is an important priority area of the government as Pakistan is a country of youth and the number of young people is rising.

He said 28 industries will benefit from 5 million housing program of Prime Minister Imran Khan and create a number of jobs for the youth.

He said work on this project is gaining pace and land has been acquired in Islamabad, Lahore and Faisalabad.

He said the Prime Minister has already inaugurated the project of constructing 25000 housing units in Rawalpindi/Islamabad and 110000 units in Balochistan.

The state minister said loans worth 100 billion rupees will be granted to youth to start their businesses under Kamyab Jawan Program.

The Minister of State said the government is giving incentives and subsidies for the promotion of the industrial sector in order to create employment opportunities for the youth.

The steps include 40 billion rupees each subsidy for energy and export sector.

He said the government will maintain the long-term trade financing facility for the industrial sector.

The Minister of State said the government is commencing 280 billion rupees five year programme for the uplift of agriculture sector.

On agriculture tube wells, 6.85 rupees per unit subsidy will be given to the farmers.

The federal and Balochistan governments have started a joint scheme with a ratio of 40:60 for the farmers of Balochistan.

Under this scheme, monthly bill of 10,000 rupees is received from the farmers while the remaining burden of 75,000 rupees is being borne by both the governments.

He said the government is also providing insurance scheme to small famers in case of destruction of their crops due to any calamity.

For this purpose, the new budget envisages an amount of 2.5 billion rupees.

Hammad Azhar said the government will introduce a comprehensive programme for the restructuring of the state institutions in order to improve governance and reduce burden on the national exchequer.

This year, he said, two LNG-powered power plants and some small organizations will be privatized, which will help generate 2 billion dollars.

He said contacts have been made for foreign investment in Pakistan Steel Mills.

Hammad Azhar said the main focus of the development budget is water related projects including dams.

For this purpose, seventy billion rupees has been earmarked.

Twenty billion rupees are being allocated for the land acquisition of Diamer Basha Dam and fifteen billion rupees for Mohmand Hydro power project.

About rail and road infrastructure projects, the Minister of State said that multi-billion dollar China Pakistan Corridor Project will be given due focus about two hundred billion rupees are being earmarked for this purpose.

Out of this amount 156 billion rupees will be spent through National highway Authority.

Giving a breakdown of road infrastructure, he said twenty four billion rupees are being allocated for Havelia-Thakot, thirteen billion rupees for Burhan-Hakla motorway and nineteen billion rupees for Sukkur-Multan section of Peshawar-Karachi motorway.

In addition, Swat expressway will be extended from Chakdara to Bagh Deheri under public private partnership.

Sambrial-Kharian Motorway will be constructed while dualization of Mianwali-Muzafargarh road will also be carried out.

The Minister of State for Finance said 58 billion rupees are being allocated in the budget for the human resource development.

He said health, education, development targets and coping with climate change are amongst our priorities. For this purpose, funds will be earmarked.

The Minister of State for Finance said our aim during the financial year 2019-20 will be to increase the tax net.

Regretting the low tax to GDP ratio, he said the country cannot make progress without payment of taxes.

He appreciated the gesture of both the civilian government and the military leadership for voluntarily deciding to cut their expenditures.

He said the civil expenditures will be reduced by five percent from 460 billion rupees to four hundred and thirty seven billion rupees.

The defense expenditure will be maintained at 1150 billion rupees.

The Minister of State said we are firm for the defense and sovereignty of the country, and no compromise will be made on the defense capability of the country.

Given the current economic situation, Hammad Azhar said the government
has acted with responsibility and taken steps for the economic stabilization.

We have increased import duty which helped us bring down imports from forty nine billion dollars to forty five billion dollars.

He said remittances have witnessed an increase of two billion dollars.

He said the IMF package will also help the country steer the economy towards stability.

Government did not opt the option to increase General Sales Tax at the rate of 17 percent to collect revenue.

The Minister said it has been recommended to decrease the sales tax on brick kilns from existing rate of 17 per cent and to replace it with in accordance with space and capacity.

It has also been proposed that sales tax on bakeries and restaurants be reduced from existing 17 percent to 7.5 percent.

The Minister recommended to impose a uniform tax rate of 10 percent on milk, cream, dry milk and unflavored milk.

Hammad Azhar said exemption on provision of power industries in erstwhile tribal areas has been extended to industrial raw material na import of plant and machinery.

In the new budget, it has been proposed to impose 17 percent Federal Excise Duty as sales tax on various steel products.

The budget envisages increase from 64.80 rupees per kilogram to 74.04 rupees per kilogram in the rates of CNG for dealers of value region I.

In region II, rates have been increased from 57.60 rupees per kilogram to 69.57 rupees per kg.

The budgetary proposals ask for increase of sales tax on sugar from existing 8 percent to 17 percent which will likely to raise the price of this commodity by mere 3.65 rupees per kilogram.

A seventeen percent sales tax has been recommended on semi processed
and cooked products of chicken, mutton, beef and fish.

Seventeen per cent sales tax on marble industry has also been in the federal budget.

In order to discourage the consumption of sugary drinks, federal excise duty has been proposed to be 14 percent from existing 11.25 percent.

It has been recommended that the Federal Excise Duty on cooking oil/ghee be increased to 17 percent.

The FED on cement should be increased from existing 1.2 rupees per kg to
2 rupees per kg.

The budget proposals introduce 2.5 percent FED on 1000 cc cars, 5 percent on up to 2000 cc and 7.5 percent on more than 2000 cc cars.

The upper slab of FED on sale of cigarettes has been increased from 4500 rupees to 5200 rupees for 1000 sticks.

A tax rebate has been proposed for those employers who will provide jobs to fresh graduates.

Tax limit on salaried class has been set at 600000 rupees per annum while it will be 400000 rupees per annum for non-salaried class.

It has been proposed that tax rate for companies should be fixed at 29 percent for the next two years.

Hammad Azhar said the government believes that rationalization of Customs Tariff is important to promote exports and manufacturing sector.

He said the government is finalizing a reforms package for the Customs tariff, which will be implemented in a phased manner.

He said textile machinery and its parts will be exempted from duties to give impetus to this important sector of the economy.

He said raw material used for the production of paper will also be exempted from Customs duty.

He said duty on different types of paper is being reduced to 16 percent from 20 per cent, which will help bring down the prices of books in the country and encourage the printing industry.

Special measures are also being taken for the publication of Quran.

The Minister of States said different schemes are being simplified to promote exports. He said incentives worth 124 billion have been given to the industrial sector under different schemes during the first 11 months of the current financial year.

The Minister of State said duty on wood is being brought to zero from three percent in order to protect the domestic forests and encourage the manufacturers of furniture.

Duty on artificial panels of wood is also being reduced to 3 percent from 11 per cent. He said plant and machinery used in the big industries for refining oil is also being exempted from duty.

There is a proposal to exempt 19 basic items of raw material used in production of medicines from three percent duty.

The new budget envisages total development outlay of 1,863 billion rupees for the next fiscal year.

The size of federal Public Sector Development Programme has been set at 951 billion rupees, which also includes foreign assistance of 127 billion rupees.

Besides, an amount of 912 billion rupees has been allocated for provincial Annual Development Plans.

During the next fiscal year, the government plans new initiatives such as District Equalization Plan, interventions in the agriculture sector to ensure food security, prioritization of construction of mega dams for water conservancy, interventions in the field of knowledge economy and skilled development on the youth.

An amount of 210 billion rupees has been earmarked to implement various physical planning and housing initiatives including Urban and Regional Planning Framework, Smart City Plans and Integrated Strategic Development Plans, including Prime Minister’s Naya Housing Programme and slum upgradation programme.

Similarly, interventions in the conservancy of environment and improvement in environment through Clean and Green Pakistan and Ten Billion Tree Tsunami Programmes have been initiated.

The PSDP allocation for Climate Change Sector has been kept at 1102 million rupees for the next fiscal year.

The National Agriculture Emergency Program intends to spend 290 billion rupees in the next five years to boost the sector.

The programme will be executed with the coordination of all provinces to ensure productivity of major crops, including wheat, sugarcane, cotton, rice, oil seed crops, improvement of water use efficiency and promoting high value fish farming.

It also includes calf saving and promoting backyard poultry.

An amount of five billion rupees, including foreign aid of 2.4 billion has been allocated for the governance sector in the next fiscal year. Capacity of public sector will be enhanced for improved public service delivery.

The budget proposes allocation of 63.5 billion rupees for special areas including merged districts of Khyber Pakhtunkhwa, Azad Jammu and Kashmir and Gilgit Baltistan.

Further, a special allocation for 75 billion rupees will be provided for equitable Regional Development in order to accelerate development of less developed areas.

The annual plan aims to improve the capacity of IT sector by enhancing infrastructure facilities, improving skill quality of human resource and accelerating implementation of public E services for citizens.

In the upcoming year, special emphasis will be made towards a robust advocacy and awareness campaign for adoption of family planning services and encouraging financing of population sector projects.

Higher Education Commission has been allocated an amount of over 28,646 million rupees for the ongoing and new schemes in the next fiscal year.

Allocation for the projects proposed by “Task Force on Technology Driven Knowledge Development” will be in addition to regular HEC budget.

The HEC budget will be used to transform the universities into world class institutions and encourage innovative ideas of researchers.

Ministry of Science and Technology has been allocated an amount of over 6231 million rupees.

This includes 921 million rupees for ongoing and 5310 million rupees for new projects.

The government’s planned initiatives for employment and skill development during the next year will help alleviate unemployment in the country.

The plan focuses to provide and promote technical and vocational training by extending geographical access through the public private partnership in market demand trades.

In the health sector, the key initiatives to widen the coverage of health care spending and achieve health targets include increase in the number of paramedical staff, expansion of lady health workers programme, strengthening of primary healthcare with backup of skilled personnel including women, medical officers in basic health units, establishment of health emergency surveillance and response system, implementation of a national plan for vaccination and establishing a health information and disease surveillance system.

Micro health insurance schemes will be made part of existing social safety nets to extend health coverage to the vulnerable segments of the society.

An amount of over 516 million rupees has been allocated for digitization of production and transmission infrastructure of Pakistan Television and Radio Pakistan with thrust on reaching out to far-flung areas of the country.

The services of Radio Pakistan will be expanded to the uncovered areas.

An amount of over 128 million rupees has been allocated for conservation and promotion of rich and diverse cultural heritage of Pakistan.

The annual development plan also envisages upgradation of power transmission and distribution system in order to reduce line losses and check power theft.

Since construction of large take substantial time, quick alternatives will be adopted like construction of medium and small dams.

Out of total water sector’s development budget, amounting to 71.9 billion rupees, an amount of about 56.5 billion rupees has been proposed for system augmentation for the next fiscal year.

An allocation of over 237 billion has been made for development programme of Transport and Logistics sector.

Giving an overview of the economic situation when the PTI government came to power, Minister of State for Finance Hammad Azhar said the country was facing overall debt of 31000 billion rupees including 97 billion dollars of external debt.

The foreign exchange reserves had dropped to 10 billion dollars.

He said trade deficit was 32 billion dollars while current account deficit touched 20 billion dollars all due to financial mismanagement of the previous government.

The circular debt had reached 1200 billion rupees at a rate of 38 billion rupees per month.

A loss of 1300 billion rupees was being faced by public sector institutions. This was unsustainable and as a result the rupee started falling in December 2017.

Minister-in-Charge for Finance, Revenue and Economic Affairs Hammad Azhar introduced “The Finance Bill, 2019” in the National Assembly.

The Bill is aimed at giving effect to the financial proposals of the Federal Government for next fiscal year and to amend certain laws.

Earlier, the Federal Cabinet meeting chaired by Prime Minister Imran Khan today gave approval to the budgetary proposals for fiscal year 2019-20.

The cabinet discussed the proposals that focused on economic stability and sustainable growth, with an emphasis on austerity, revenue generation and uplift of down-trodden.

Meanwhile, People belonging to different walks of life especially businessmen and industrialists have hailed Federal Budget for the next fiscal terming it a good omen for the solution of the current economic crisis.

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