Finance Minister Miftah Ismail on Friday announced new fixed taxes on retailers to reduce the budget deficit and “in detail”.super tax“On 13 big industries announced by the Prime Minister” Worried Share Market.
Addressing the National Assembly (NA) session called to end the budget debate, Ismail said the country was no longer on the path of lapse as it was on the path of progress. it was with him Presented Budget for the financial year 2022-23 on June 10 with an outlay of Rs 9.5 trillion.
As the debate on the budget began in NA today, Ismail said that most of the recommendations made by lawmakers in the Senate and NA during previous meetings were incorporated into the budget.
During his address, he referred to the taxes announced by Prime Minister Shahbaz Sharif earlier in the day, Ismail told the House that no indirect tax was levied nor any tax on consumption.
“We have taxed the rich. Most of the revenue will be collected through that so that we do not have to ask for money from others and we are able to reduce our budget deficit,” he said.
Then, on a lighter note, he sought credit for taxing companies owned by PM Shahbaz’s son.
“And my companies will also pay Rs 200 million in taxes as compared to earlier and so if we are asking others to pay more taxes, we are also contributing to it. [cause]said the Finance Minister.
He said the government is committed to the IMF that not only will the primary deficit of Rs 1,600 billion recorded this year be reduced but there will be a surplus of Rs 153 billion.
To achieve this, as well as self-reliance, an additional tax of 1 pc will be levied on individuals and entities whose annual income is more than Rs 150 million due to poverty alleviation. Similarly, he said, those with an annual income of more than Rs 200 million would be subject to an additional tax of 2 pc, those with an income above Rs 250 million to 3 pc and an annual income of more than Rs 300 million would be subject to a tax of 4 per cent of their income. will be imposed.
“This is a one-time tax for the fiscal year 2022,” he said.
Besides this, the minister said, the government has identified 13 sectors, which have earned significant gains this year.
“And we have decided that companies with income above Rs 300 million will be subject to a super tax of 10 pc for a year,” he announced.
The minister said companies operating in cement, steel, sugar, oil and gas, fertilisers, LNG terminals, textiles, banking, automobile assembling, cigarettes, beverages, chemicals and airline sectors will have to pay this tax.
He said that the institutions in other areas will have to pay this one-time additional tax of 4 percent of their income.
Moving on to the details of other taxes, he said that there were around 9,000,000 retail shops in Pakistan and the government wanted to bring 2,500,000 to 3,000,000 of these shops under the tax net.
For this purpose, he said, a new scheme was introduced under which the income tax and sales tax that these shops had to pay was “fixed along with their electricity bills”. He said that under this initiative, small shops would have to pay a fixed tax of Rs 3,000 per month and large retailers Rs 10,000.
“After this, he will not be questioned on anything else,” the minister said.
Further, he said that the retailers who were dealing in gold and had shops of 300 square feet or less, would have to pay a fixed income and sales tax of Rs 40,000. He said that the sales tax for large shops has been reduced from 17 per cent to 3 per cent.
Ismail said withholding tax on gold sold by people to goldsmiths has been reduced from 4 per cent to 1 per cent.
He announced that a similar fixed tax scheme would be announced for realtors, builders and car dealers.
“This tax is on their income and not on expenditure, and that is why it will not increase inflation but will increase our revenue,” Ismail said.
He said that the government has withdrawn the condition of withholding tax on companies operating in the IT sector and their sales are less than 80 million. He said the tax on venture capital funds invested in the IT sector has also been removed.
Regarding oil marketing companies, Ismail said that these entities will have to pay a minimum tax of 0.75 per cent, which has been reduced to 0.5 per cent.
Besides, he said, 5 pc commission was deducted on outgoing indenters at the time of receipt. “It has now been reduced to 1pc.”
Ismail said that expatriate Pakistanis who had NICOP would be considered included in the list of active taxpayers so that they do not have to pay any additional tax while buying property, adding that there is a provision of 50 percent reduction in capital gains tax for those people. . The allotment of plots while in services was initially omitted from the budget but has now been reinstated.
Ismail said the families of martyrs and war-wounded persons would be exempted from tax on income from plots and added that sales tax on hides and skins and surgical instruments has also been removed.
The minister also told about the relief measures taken by PM Shahbaz, including ‘sasta petrol, sasta dieselScheme and program to make available wheat flour, sugar and ghee at utility shops.
Ismail also informed the House that the tax target, which was initially fixed at 7.004tr, has been increased to RS7.47tr. Also, he said, the target of non-tax revenue which was set at Rs 2tr has been revised to 1.94tr.
He announced that the government would give Rs 4.37tr to the provinces.
“After all these expenses, the federal government’s deficit would be RS4.55tr and the total deficit would be Rs3.78tr,” Ismail said.
The minister recalled that when the erstwhile FATA was merged with Khyber Pakhtunkhwa, the tribal areas were exempted from “all kinds of” tax till 2023.
He said the government wants to introduce a bill to exempt residents of these areas from paying income tax.
However, he said companies and industries operating in these sectors would be brought under the tax net.
‘Farmer Friendly Budget’
He announced that the sales tax on cotton cakes (oil cake) was dropped and the budget was termed as “farmer friendly”.
“I don’t think a more farmer-friendly budget has been presented in the last 10 to 20 years,” he said, adding that it reflects the values of the current coalition government.
The minister said that as a result of this “farmer friendly” budget, the country will become self-sufficient in the production of edible oil, wheat and other commodities. “These will be long-term benefits,” he said.
Ismail said that funds for farmers in the budget should not be considered as a subsidy but as an investment. “We believe that if we invest in farmers, they will give us the best returns.”
‘Bad fiscal year’
The minister accused the PTI government of bringing the country to the brink of lapse and said that we have saved the country from lapses.
“I want to give this good news to the country today that the country […] It is no longer on the path of default but on the path of progress.”
The minister said he believed the current fiscal year would be considered the worst in Pakistan’s history as “we deviated from several targets and recorded a significant budget deficit”.
He noted that “the federal government has recorded a shortfall of 8.95 percent of the old gross domestic product (GDP)”, adding that this reflects the wide gap between the country’s spending and resources. “And then we have to take money from others,” Ismail said, which is why he had to go on several foreign trips soon after becoming finance minister in April.
“And then when we talk of freedom, independence and self-reliance, what kind of freedom is it that we take a loan of Rs 20,000 billion in three to four years?”
Ismail accused former Prime Minister and PTI chief Imran Khan of taking such a huge debt in a short span of his tenure and said that by doing this we do not move towards freedom but towards slavery.
And then, Ismail, referring to Imran, said, “You should not lecture people that we are leading [true] Independence”.
He also criticized the Imran-led PTI government over the fuel and energy subsidies introduced in February.
He said the subsidy amounted to Rs 120 billion and thanked the PML-N allies in the coalition for acknowledging that the government cannot afford this expenditure in such difficult times.
“Abolishing the subsidy was a difficult decision,” he said and thanked coalition partners again for supporting the decision. “They all believed it would affect the political capital but they all agreed that Pakistan was the first priority.”
‘Resumption of IMF program necessary to save country from default’
Ismail estimated that the current account deficit would have reached around $17 billion in the current fiscal year, adding that the meager reserves of about $10 million could not sustain the deficit.
And that was why it was necessary to restart the International Monetary Fund’s (IMF) $6 billion loan program to protect the country from default, Ismail explained.
Sharing details of the government’s talks with the IMF in recent days, he said the moneylender had responded that Pakistan had made “significant progress in financial 23 numbers”.
Ismail ended his speech by thanking the PM, his team and others, including “international institutions with the help of which Pakistan will be strengthened”.