ISLAMABAD, (SANA): Federal Finance Minister Dr Hafeez Sheikh while presenting the budget in National Assembly has announced 20 percent ad hoc relief allowance in salaries of government employees and pensions of retired pensioners; meanwhile 1,000,00 internship and technical jobs for the youth has been announced.
Finance minister has announced to provide all required funds for overcoming electricity crisis; meanwhile the PML-N members staged severe protest during the speech of finance minister and there was scuffle between PML-N and PPP members during the speech.
The Federal budget for the next financial year with total outlay of 2960 billion rupees has been announced with focus on relief for the masses, incentives for the industry and job generation.
In the fifth budget of presented in the National Assembly by Finance Minister Dr. Abdul Hafeez Sheikh, no new tax has been imposed and 20% adhoc relief allowance has been proposed for Government employees and pensioners.
As Dr Abdul Hafeez Shaikh started his Budget speech; the PML-N members resorted to protest. They gathered in front of the Speaker and chanted slogans against the government. They also tore the copies of the budget documents and threw towards the Finance Minister.
The protesting members were holding placards inscribed with slogans “End Load-shedding”, “Price Hike unacceptable” and “Respect the Judiciary”.
The 42nd Session of the National Assembly began in Islamabad Friday afternoon with Speaker Dr. Fehmida Mirza in the chair. The newly elected member of the National Assembly Muhammad Israr Tareen took oath as MNA. Speaker National Assembly administered the oath to him.
The chair announced the panel of the Presiding Officers for the session. It includes Nawab Muhammad Yusuf Talpur, Nadeem Afzal Gondal, Chaudhary Muhammad Bashir Virk, Riaz Fatyana, Shagufta Sadiq and Parvez Khan Advocate. The House offered Fateha for those soldiers and civilians buried under avalanche in Gayari, Siachen.
Finance Minister Dr. Abdul Hafeez Shaikh laid before the National Assembly papers regarding Supplementary Demands for Grants and Appropriations for the financial year, 2011-12 and Excess Demands for Grants and Appropriations for the years 1989-90, 1991-92 and 2005-06. The Finance Minister also introduced in the House the Finance Bill, 2012.
The total federal receipts are estimated at 3234 billion rupees which is 18.3 percent higher than 2732 billion rupees of the outgoing year. Tax collection by FBR is targeted at 2381 billion rupees, enhancing tax to GDP ratio to 10.1 percent.
Provinces would get 1459 billion rupees from Federal Divisible Pool under the 7th NFC Award as against 1203 billion rupees during the current financial year.
The net federal receipts for the next year are estimated at 1775 billion rupees as against 1529 billion rupees during the current financial year resulting into budgetary deficit of 1185 billion rupees.
Provincial surpluses during the next financial year are expected to be in the range of eighty billion rupees. The overall fiscal deficit is estimated at 1105 billion rupees which would be 4.7 percent of the GDP as against 5.5 percent during the outgoing year.
Allocations for Benazir Income Support Programme have been increased from the existing fifty billion rupees to seventy billion rupees for the next financial year. Ten billion rupees have been allocated for export development fund in the new budget.
The Finance Minister announced that the government would provide targeted subsidy to low income groups on food items through utility stores. Under this scheme card holders of BISP would get ten percent discount on purchase of essential items like sugar, ghee, rice, gram and moong pulses and wheat flour from the utility stores. This means that the poor would get these items seventeen percent less than the market. He said the government plans to open two thousand new utility stores to provide immediate relief to 3.5 million families.
Dr. Abdul Hafeez Sheikh said one hundred thousand unemployed educated youth would be afforded job opportunities through internships and technical trainings. Under the internship programme, Bachelor and Masters degree holders would be provided forty thousand internships each by the public and private sector. In addition twenty thousand graduates would be imparted skills that are in demand in the domestic and foreign markets. The government would be spending 9.5 billion rupees on these measures.
The Finance Minister also announced measures to further improve socio-economic uplift in Balochistan, FATA and Gilgit Baltistan as part of the strategy to bring them at part with other parts of the country.
He said the federal government has decided to promote higher education in Balochistan, FATA and Gilgit Baltistan and for this purpose it would bear tuition fee for all students belonging to these areas for Masters and PhD programmes in renowned universities of the country. Five hundred million rupees annually will be spent for this purpose.
Dr. Abdul Hafeez Sheikh announced 20% adhoc relief allowance for Government employees and pensioners. He pointed out that this is for the fifth consecutive increase in salaries and pensions during tenure of the present government.
The Finance Minister said the present government took difficult decisions to expand tax net by abolishing exemptions and bringing new tax payers in the net. This has led to twenty-five percent increase in revenues this year.
He said after announcement of the seventh NFC award the share of the federal government has come down drastically as it gets only thirty percent after making payments to provinces, Gilgit Baltistan, Azad Jammu and Kashmir and Tribal Areas. It is necessary that provincial governments should come forward and accelerate their efforts to increase their revenues.
He said there is a good news for tax payers, salaried people, businessmen and corporations that the new budget does not propose any additional burden on them rather they are being provided tax relief.
The Minister announced increase in the income tax exemption limit from the existing three hundred and fifty thousand rupees to four hundred thousand rupees. This relief would also be applicable to businessmen and association of persons.
Tax slabs have been reduced to just five for the benefit of the tax payers. Under the new scheme of things, tax payers will have to pay more tax on that part of the income that is over and above a particular slab.
He said one can imagine the quantum of relief from the fact that tax payers with a monthly income of thirty-five thousand rupees who were presently paying a tax of ten thousand five hundred rupees will not pay a tax of just one thousand rupees. This decision would provide relief worth eight billion rupees to low income tax payers and there will be no increase in the tax rate for the current tax payers.
A tax payer’s owner card is being introduced to recognize those who pay their taxes honestly. Holders of these cards would get special concessions and facilities at offices of NADRA, Passport, Airports, Customs Immigration, FBR and other public and private forums. FBR would also publish names of such tax payers on its website with a view to honouring them.
The Finance Minister announced incentives for investors. The rate of income tax on business turnover which is one percent at the moment is proposed to be brought down to 0.5 percent and presumptive tax regime would gradually be abolished in three years. Income tax rate for commercial importers is being reduced from five to three percent, for exporters from one percent to half percent and for suppliers from 3.5 percent to 2.5 percent.
Withholding tax on profits held on Intra-group loans is being abolished. Withholding tax exemption limit of twenty-five thousand rupees on withdrawal of cash from banks in a day is being raised to fifty thousand rupees.
The value of vehicles for the purpose of depreciation rate is being increased from the existing 1.5 to 2.5 million rupees whereas initial rate for new buildings would be twenty-five percent.
Income tax exemption limit for investment in Insurance and Securities is being increased from fifteen percent to twenty percent.
Manufacturers have been designated as withholding agents as part of the measures to bring some undocumented sectors into tax net. These agents would receive one percent tax on sale of good to distributors and dealers which would be adjustable.
Multiple rates of GST have been abolished and now there will be only one sixteen General Sales Tax for taxable items. Zero rating on plastic, sprinkler, drip, spray equipment, mono filament yarn, net cloth and remeltable scrap has been abolished but there will be sales exemption on these items.
There is a proposal to bring canola oil into zero rating regime so as to document the industry. GST on tea is being reduced from the existing 16 percent to only five percent with a view to check its smuggling.
The Finance Minister said as part of the strategy to abolish Federal Excise Duty in two years, FED on ten more items including base lube oil, lubricating oil, filter rods, and skin care products is being done away with. Federal Excise duty on live stock insurance is also proposed to be abolished with a view to promoting dairy industry. Similarly, Excise duty on Services provided by Asset Management Companies is also being abolished.
Federal Excise Duty on cement is being reduced from the existing five hundred to four hundred rupee per metric ton. Federal Excise Duty on travel to Pakistan is being abolished.
Hafiz Sheikh said with a view to bring down prices and provide relief to the common man, the maximum rates of customs duty is being brought down from thirty five percent to thirty percent. Eighteen Raw Materials and nine components used in production of stationery are being exempted from customs duty.
The Finance Minister said the rate of customs duty on Shredded Tyres and Rubber Scrap is being reduced from twenty to ten percent. Customs duty on eighty eight raw materials used in pharmaceutical industry is being lowered from ten to five percent to ensure availability of medicines at affordable prices.
There will be twenty five percent reduction in import duties and taxes on Fuel Efficient Hybrid Electric vehicles and their batteries. The Finance Minister said the government is considering offering financial relief on import and installation of generators and UPS with a view to minimize the difficulties of the people.
The new budget envisages Annual Development Plan worth 873 billion rupees which is twenty five percent more than the outgoing year. Of this, the share of Federal Public Sector Plan will be 360 billion rupees which is twenty percent higher than the current year.
The priority of the new PSDP would be on the completion of ongoing projects; focus on backward areas; projects for welfare of women and children; infrastructure development especially energy and water; and projects in the sector of Higher Education.
Power sector would get 69 billion rupees besides 115 billion rupees to be spent on WAPDA and electric companies. Water sector would get 48 billion rupees; social sector 44 billion rupees and FATA, Gilgit Baltistan and Azad Jammu and Kashmir would get 37 billion rupees from the development budget. The PSDP includes 16 billion rupees for Higher Education and 84 billion rupees for transport and communication.
The Minister said the development strategy of the government is aimed at ensuring balance in regional growth. He said the government has taken several steps for the development of Balochistan to remove its sense of deprivation. These include: internships for fifteen thousand Baloch youth, subsidy of four billion rupees on agriculture tube wells, recruitment of 2400 Baloch youth in the federal departments, regularization of all contractual employees and giving greater share to Balochistan in the Federal PSDP.
The minister said that financial allocation has been increased for Gilgit-Baltistan to bring it into the mainstream. For this purpose, the government has increased Block Development Allocation for the area to 16 billion rupees.
Other steps taken for the purpose include appointment of five thousand police personnel, hundredn pecent increase in salary of police officials, provision of monthly economic support to fifty thousand households under Benazir Income Support programm, launching of mega development projects in the area at a cost of ten billion rupees, besides expansion of Gilgit and Skardu airports and upgradation of dry port for increasing trade links with China.
Dr. Abdul Hafeez Sheikh said that the government has provided one hundred and ten billion rupees for improvement in the living standard of the people of the Federally Administered Tribal Areas. These allocations include wheat and power subsidies.
He said that the government has set aside seventeen billion in the Public Sector development Programme for this purpose. This include setting aside of ten billion rupees in power subsidy.
The Minister said that the government is paying special attention to the development Azad Jammu and Kashmir. It has set aside twelve billion rupees for development projects in the state and sixteen and a half billion rupees for current expenditures.
Dr. Hafeez Sheikh said that remittances from overseas countrymen have greatly increased, which was unprecedented in the past. The government took a number of steps and contacted more than three hundred international institutes affiliation with Money Transfer Business to further increase the remittances.
Despite the international economic recession, the government has succeeded maintaining the high level of exports. He said that the imports bill grew due to higher petroleum prices and import of urea fertilizers. Besides, the non-release of Coalition Support Fund had a negative impact on external receipts and budget.
The minister said that realizing the significance of fiscal restraints, the government adopted austerity measures and took steps for extraordinary increase in revenues. To save the people from the burden of increase in oil prices and power tariff, the government had to incurred some additional expenditures. The government’s efficiency was also affected due to scarcity of resources on account of the NFC Award.
Defence gets over 545 billion rupees in the new budget as against revised estimates of over 510 billion rupees in the outgoing year.
Expenditure on general public service including servicing of foreign and domestic debt and repayment of foreign loans would be over 1876 billion rupees as against revised estimates of 1898 billion rupees for the current financial year.
Expenditure on public order and safety affairs is estimated at 70 billion rupees; economic affairs 53.6 billion rupees; health affairs 7.8 billion rupees; environment protection 736 million rupees; housing and community amenities 1.8 billion rupees; Sports, Culture and Religion 6.2 billion rupees; education 47.8 billion rupees and social protection 1.3 billion rupees.
Allocations for subsidy to WAPDA and PEPCO have been proposed as 134.9 billion rupees; for KESC 50.3 billion rupees; Trading Corporation of Pakistan 10 million; Utility Stores Corporation 6 billion rupees and PASSCO 5.1 billion rupees.
Special grants to provinces are estimated at 55.73 billion rupees with maximum of 25 billion rupees for Khyber-Pakhtoonkhwa followed by 16.5 billion for Balochistan; 9 billion for Sindh and 5 billion for Punjab
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