ISLAMABAD: Finance Minister Miftah Ismail claimed that the coalition government led by Prime Minister Shehbaz Sharif has successfully manage to divert the path of the country from default to progress and prosperity.
He was addressing windup speech on the federal budget for the fiscal year 2022-23 in the National Assembly on Friday.
The finance minister said there hasn’t been a more “farmer-friendly budget” in the last 10 years.
After the debate on the budget commenced in the assembly today, Miftah said most of the recommendations put forward by lawmakers in the Senate and NA during preceding sittings had been incorporated into the budget.
“The long-term benefits of this budget will be that the country will become self-sufficient in edible oil, wheat, and other commodities just as the PML-N government had left it during its last regime,” he claimed.
The finance minister further added that the outgoing fiscal year 2022-23 will be considered a “bad year” in the country’s history as Pakistan had a huge budget deficit and missed several targets.
“The federal government’s budget deficit of the current fiscal year was Rs.53,01 billion, he said, adding that such a deficit means that the government has to ask for money from the entire world.
Miftah also told the house that the tax target, which was initially set at Rs7.004 trillion had been increased to Rs7.47 trillion.
He announced that the government will give Rs.4.37 trillion to the provinces.
“After all these expenses, the federal government’s deficit would stand at Rs4.55 trillion and total deficit at Rs3.78 trillion,” the finance minister added.
While criticizing to the former prime minister Imran Khan’s narrative regarding self-sufficiency, he said that you talk about self-sufficiency and independence, but what kind of independence is this when you take Rs20,000 billion loans during a period of three to four years.
Miftah claimed that the coalition government saved the country from defaulting that the PTI government had taken the country close to that.
Miftah thanked PML-N and other parties’ leaderships for allowing him to take tough decisions to save the economy from default.
He said the federal government has posted a deficit of 8.95% of the old gross domestic product (GDP) which is indicating the wide gap between the country’s expenditure and resources.
In this deteriorated situation, the government have to take funds from others to run the government affairs, he said. That’s why, he had to go on multiple foreign trips right after becoming the finance minister in April.
He also blamed the previous government over fuel and energy subsidies that it had announced on February 28.
Miftah said that the subsidies were worth Rs120 billion and thanked the PML-N partners in the coalition set up for accepting that the government could not bear this expense at a difficult time like this.
“It was a tough decision to end the subsidies,” he said.
He termed the restoration of the International Monetary Fund (IMF) programme as necessary in order to save the country from defaulting.
Miftah highlighted that now the Fund itself has confirmed that major progress has been made in talks with Pakistan, which he said would be reflected in the upcoming steps taken by the government.
Commenting on the taxes, he said the government didn’t impose indirect taxes and taxes on consumption which impacts the poor disproportionately.
“Taxes have been imposed on the rich and elite people and companies to generate more capital from them so that we don’t have to beg for money from the world,” Miftah said.
Moving on to the gold markets in Pakistan, Miftah said that there are over 30,000 gold shops, however, only 22 are registered and they are showing their average sales worth of Rs4,000 per day.
The government believes that they are earning approximately Rs100 million, he claimed and adding that fixed income and sales tax worth Rs40,000 has been imposed on jewelry shops that cover an area of less than 300 square feet so that all jewelers come into the tax radar.
Meanwhile, 17 percent sales tax has been reduced to 3 percent for shops covering an area of more than 300 square feet (and fall under tier-1) as such higher tax can never be received from jewellery markets.
Moreover, the withholding tax of 4% has been brought down to 1% for local consumers who sell gold in the markets.
The finance minister said that these taxes imposed on the gold sector are mostly in line with the recommendations of gold shop owners.
Miftah further added that a special scheme will be soon introduced for people who are involved in the real estate business, for builders who sell the property after its construction, car dealers, and restaurant owners under which fixed income tax will be imposed on them.
The government wants to tax them their income and not their expenditures. The government has decided to impose fixed taxes on these businesses which would not add to rising inflation and only increase revenue
MIftah said that the government has tried to put less burden on the poor. The premier has launched a cheap petrol and diesel scheme under which so far more than four million people have registered.
He also clarified that these four million people are other than those who are already registered under the Benazir Income Support Programme (BISP). These people have been given Rs2,000 each which amounts to Rs16 billion.
Those people whose household income is less than Rs40,000 and have still not registered under the scheme can message on 786 to avail the facility,” he requested.
The finance minister said the government will continue to provide which wheat, ghee, and sugar at cheaper rates on Utility Stores Corporation (USC) throughout the year. However, the government is planning to set an income target for the facility which will ensure the benefit is only provided to the deserving.
The finance minister said that to curtail the previous four record budget deficits during PTI’s tenure, taxes will be collected from the rich. “The revenue from the rich will help the government achieve its target of budget surplus which has been committed to the IMF,” he added.
Moreover, to decrease the country’s reliance on other countries for funds, Miftah announced a list of taxes that would be collected from the elite class and large-scale industries. He said that the government will take 1% additional super tax on individuals or companies earning more than Rs150 million, 2% additional super tax on individuals or companies earning more than Rs200 million, 3% additional super tax on individuals or companies earning more than Rs250 million and 4% additional super tax on individuals or companies earning more than Rs300 million during next fiscal year.
“These additional taxes will be only be imposed for a year (fiscal year 2022-23),” he clarified.
Miftah shared the government had identified 13 sectors that had earned significant profits this year. He said that the government has decided that companies that have an income of more than Rs300 million will be subject to a super-tax of 10% for a year. He mentioned that the Cement, Steel, Banking, Airlines, Textile, Automobile assembling, Sugar mills, Beverages, Oil and gas, Fertiliser, Cigarettes, Chemical and LNG terminals will pay 10 percent supper tax. While, 4% super tax will be applicable to all other sectors.
Miftah, later in a tweet, also clarified that the super tax of 4% will be applicable to all sectors. But for the specified 13 sectors, another 6% will be added for a total of 10%. So, their tax rates will go from 29% to 39%.
Moving on to details of other taxes, he said there were around 900,000 retail shops in Pakistan and the government wanted to bring 250,000 to 300,000 of these shops into the tax net.
Moving towards some other concessions which have been decided after considering the recommendations, the finance minister announced the following:
- Condition of withholding tax on IT sector companies withdrawn
- Companies with sales less than Rs800 million exempted from withholding tax, statement submission
- Tax on venture capitalist funds invested in IT sector removed
- Minimum tax on oil marketing companies which was 0.75% reduced to 0.5%
- Commission on outgoing indenters at the time of receipt slashed to 1% from 5%
- Provision of 50% reduction in capital gains tax for those who had been allotted plots while in service restored
- Families of martyred and war-wounded individuals exempted from tax on income from plots
- Sales tax on leather and surgical instruments industries removed
Overseas Pakistanis who had a NICOP would be included in the list of active taxpayers so they don’t have to pay additional taxes on property purchases.