ISLAMABAD (Dunya News) – The Pakistan Tehreek-e-Insaf (PTI)-led federal government In Naya Pakistan , amid much criticism from the opposition parties over what they had been calling weak economic policies , is all set to present its first federal budget for the upcoming financial year 2019-20 in a session of the National Assembly (NA) in Islamabad on June 11 (today).
The budget envisages fiscal management, revenue mobilization, measures for economic stabilization and growth, reduction in non-development expenditures; boosting exports besides providing relief to the masses, promoting investment for job creation and people friendly policies for the socio economic prosperity of the country.
Main focus in the budget would be on fiscal consolidation, revenue mobilization while the government is likely to enhance allocations for social safety net for providing maximum relief to vulnerable segment of the society, sources familiar with the matter told the media.
Meanwhile, President Arif Alvi has summoned the 11th session of the NA to meet in the Parliament House in Islamabad today at 4.00pm.
The budget is anticipated to focus on the development of the social sector, besides introducing reforms for improving governance and boosting private sector investment.
For improving tax revenue collection, the government aims to introduce effective measures for bringing improvements in the domain of tax, broadening the tax base, and facilitation to tax payers.
The PTI is of the view that a strong revenue generation will play a critical role in achieving the targets for economic growth, and therefore it is likely to set the revenue collection target at Rs5.55 trillion for the fiscal year 2019-20.
The preparations for the announcement of the federal budget for fiscal year 2019-20 have continued in full swing in accordance with the prescribed timelines. The budget has been prepared in close coordination between all departments and ministries involved in budget related events including the presentation of the budget in the parliament and launching the much-awaited Economic Survey.
The pre-budget document presenting state of country’s economy, ‘the Economic Survey of Pakistan’ will be issued today.
The survey is likely to outline the overall performance of economy during the outgoing fiscal year, providing a realistic feedback and basis for future planning.
Govt. Employees salary increase
Budget likely to impose health tax
Moreover, the government is also likely to announce health tax on tobacco and sugary drinks.
The government has announced health tax on cigarette to cut rising tobacco consumption that kills nearly 160,000 Pakistanis every year.
The Ministry of National Health Services (NHS) Regulation and Coordination recommended the measure to discourage cigarette smoking, increase revenues and save money by cutting tobacco-related health care costs.
Health tax of Rs10 per pack of 20 cigarette sticks and 1 per cent tax on all beverages (Rs1 on 250ml) has been proposed by NHS Ministry along with an increase in Federal Excise Duty on cigarettes in the upcoming budget.
Prime Minister Imran Khan has also approved the new tax and announced to end the tax-free cigarette facility for the prime minister, chief ministers and governors of all provinces to control the use of tobacco.
The budget for the upcoming financial year 2019-20 is likely to introduce tax burden on salaried class, as the federal government plans to reverse tax concessions for increasing annual revenue.
Sources familiar with the matter told the media that two tax proposals will be considered by the government in this regard; the first, if implemented, will impose no tax on low salary earners up to Rs400,000 per annum, whereas the second will impose on tax on individuals earning up to Rs600,000 annually.
It is under consideration to adopt the tax year 2017-18 slabs for taxing, which will reduce monthly net income of salaried individuals.
Rs4,950 will be deducted from the salaries of individuals earning Rs100,000 monthly.
High earners with income up to Rs150,000 per month will pay Rs8,916, meaning they will pay Rs10,7000 annually in the form of tax, as compared to current tax slab of Rs30,000 annually.
Moreover, individuals earning up to Rs200,000 per month will pay Rs182,000 tax on annual basis.
Similarly, the revision of tax slabs to the year 2017-18 will help to raise additional income tax from association of persons in the tax year 2019-20.
The PTI-led coalition government has already reversed some incentives through the amended Finance Act 2019 given to business enterprises and individuals through the Finance Act 2018.
Naya Pakistan Employees salary increase
Other sales taxes and expenditure
The proposed budget strategy paper estimated the next year’s federal current expenditure at more than Rs6 trillion, following which the federal expenses are expected to reach Rs4 trillion.
As the federal government is set to announce the federal budget, it has set a target of Rs5,500 billion in tax revenue, with an expected increase of approximately Rs1,400 as compared to the previous year.
With an increase of one percent in the sales tax, the government has set a target of collecting Rs90 billion additionally.
Furthermore, the imposition of additional sales tax on petroleum products, Rs60 billion would be collected.
Besides, the proposal of increase in sales tax on tobacco, sugar, drinks and fertilizers has also been forwarded for a possible consideration.
The sales tax on tractors may also be increased from 5 percent to 18 percent.
Meanwhile, the government has formulated effective measures for restricting the tax evasion on hotels and marriage halls.
Importantly, implementation will be ensured on the track and trace system over receiving sales taxes. Out of the total tax revenue, Rs3,160 billion will be transferred to the provinces.
Sources said that the non-tax income in the budget is expected to be more than Rs1150 billion. According to Dunya News, the federal government is anticipated to spend Rs925 billion on development projects.
Besides, the GDP growth is expected to be more than Rs40 trillion in the next fiscal year and the deficit could be more than Rs2,350 billion.
According to sources, Rs2,100 billion from the budget will be spent on interest and debt payments. The volume of subsidies in the next budget can be kept at more than Rs260 billion.
News Source dunyanew