Finance Minister Mifta Ismail is addressing a post-budget press conference today, a day after he introduced the Finance Bill 2022-23 in the National Assembly.
The budget outlay was proposed at Rs 9,502 billion, which is nearly one trillion rupees more than last year’s outlay.
In his press today, Ismail cautioned that the country was passing through an unprecedented period, which he described as “very difficult”.
“I have never seen a more difficult time than this in the last 30 years, where on the one hand the international environment is very challenging and the government or the administration has gone haywire and nothing has been done to resolve the issues,” the finance minister said in a media briefing. Is.” Information Minister Maryam Aurangzeb and Minister of State Dr. Ayesha Ghos Pasha.
He presented some figures of the work being done by the government in the current financial year. With regard to power subsidy, he said Pakistan paid over Rs 1,100 billion for this purpose.
In addition, he said, the government is forced to pay Rs 500 billion in circular loans.
Ismail said that despite having “one of the most efficient units of electricity generation in the world”, Pakistan is producing electricity at expensive rates. Referring to the previous government, he said, “Why is it expensive? It is because of poor administration.”
Speaking of energy, he said that while the federation suffered a loss of “1,100-1,600bn”, “it would overwhelm the company”.
He said he was “not worrying” but Pakistan’s economy “cannot tolerate this”. He said the amount of Rs 1,600 billion is more than the amount spent on the defense budget and running the civilian government combined.
When it came to gas, Ismail said a subsidy of Rs 400 billion was given in the current financial year. “You’re buying gas for $20 and selling it for $1-2 – where will the state get the money?” He asked people to see who was giving the subsidy and who was receiving it. “On an average, subsidies earn less than Rs 50,000 a month and those receiving it are in the hundreds of thousands.”
Budget FY23 at a Glance
The government has budgeted a total current expenditure of Rs 8,694 billion for the fiscal year 2013, which is 15.5 per cent higher than last year’s budget figure.
Interest payments, or debt servicing, accounted for 45.4 per cent of total current expenditure, an increase of 29.1 per cent from the previous year to Rs 3,950 billion. Meanwhile, defense expenditure has been budgeted at Rs 1,523 billion, which is 17.5 per cent of the total current expenditure and an increase of 11.16 per cent over the previous year.
The total revenue budget for FY23 is Rs 9,004bn. After subtracting the provincial transfers of Rs 4,100 billion as part of the National Finance Commission (NFC) award, net revenue comes to Rs 4,904 billion, up nine percent from last year.
The government has set a tax collection target of Rs 7,004 billion for the Federal Board of Revenue (FBR) for FY13, up 20.1 per cent from Rs 5,829 billion in the previous year.
major budget proposal
- Petroleum levy of Rs 750 billion proposed
- No tax on salary up to Rs.100,000 per month; Earlier the minimum taxable salary was 50,000/month
- Proposed tax on capital gains on immovable property holdings (assets worth more than 25m) and sale of assets
- Minimum tax bracket for small businessmen raised from Rs 0.4 million to Rs 0.6m. Will be done
- 15 percent hike in salary of government employees
- Sales tax exemption on import and distribution of solar panels
- Advance withholding tax will be charged from foreign senders through credit, debit and pre-paid cards
- Advance tax to be increased on cars above 1,600cc
- Full customs duty exemption on pharmaceutical ingredients
- 51 billion rupees proposed for education projects
- Rs 24bn for health sector
- Those earning an annual income of Rs 300 million or more per annum are proposed to pay an additional tax of 2 per cent
- Advance 2pc tax on the value of high-value hybrid and electric vehicles.
For FY23, the total fiscal deficit stands at Rs 3,798bn, which is 4.9pc of the Gross Domestic Product (GDP). Last year the deficit was estimated at 6.3 per cent of GDP.
The total allocation for the Public Sector Development Program (PSDP) has been budgeted at Rs 2,158 billion for FY13, just one per cent more than Rs 2,135 billion last year.
Ismail said during his budget speech yesterday that the government has to move towards “sustainable growth”, the government has set a growth target of five per cent.
Further, he said, the government had set a target of 11.5 per cent inflation for the next year.
taxes
Ismail had also declared that those who have more than one immovable property in Pakistan, the value of which exceeds Rs 25 million, will be deemed to have received rent amounting to 5 per cent of the fair market value of that immovable property. They will have to pay 1% tax on this deemed rental income. However, one house per person will be exempt from this tax.
The government has also proposed to levy 15 per cent tax on capital gains on immovable properties if the holding period was one year or less. The tax will be reduced by 2.5 percent every subsequent year, eventually becoming zero once the holding period reaches six years.
It is proposed to increase the rate of advance tax on purchase and sale of property to 2 pc from the existing 1 pc for filers, while it will be 5 pc for non-filers.
Under the budgetary proposal, the government said that any citizen of the country who is not a tax resident of any other country will be treated as a tax resident of Pakistan. It said the criteria of a resident individual with respect to taxation is being revised as the existing system is being “misused by wealthy persons”.
Making the IMF and the people happy all at once?
Analysts believe the new budget is seen as a balancing act by the government that aims to meet the conditions of the International Monetary Fund’s bailout package and preserve political capital.
a dawn report good says that although Ismail did not mention this in his budget speech, measures were taken to meet the IMF’s conditions – no matter how much inflation – Budget documents show that he sold 750 billion rupees and 17 pcs. Have agreed to levy the Petroleum Development Levy. Taxes on fuel from consumers.
“We have taken some tough decisions and this will continue [next year]The report quoted him as saying and described the statement as a sign of an upcoming increase in fuel prices and imposition of taxes.
However, the report said, Ismail had also sought some relief to salaried individuals, pensioners, savers and small businesses by cutting their existing income tax burden and increasing the salaries of civil servants.
As it outlined the measures proposed in the new Finance Bill, it concluded: “Yet it is very disappointing that a finance minister has failed to correct the structural imbalances in the economy of his predecessors and prevent creating new shocks.” Criticized. Absorbent to save people.
dawn‘s editorial Today also highlighted that Ismail in his budget speech had remained silent about the increasing burden that citizens were expected to bear after the new budget. “The budget document, on the other hand, reads as if the government simply removed the item from a checklist submitted by the IMF”.
The editorial further said: “It is worth asking the government whether this budget was designed solely to secure IMF debt as it otherwise appears to be lacking in intent.
“There is nothing in this to suggest that the government is serious about correcting the structural imbalances inherent in the economy – the same imbalances that the finance minister was complaining loudly a day ago when he unveiled the Pakistan Economic Survey. were.”
more to follow