Islamabad: The government on Tuesday presented federal budget for the financial year 2014-15 with a total outlay of 3960 billion rupees in the national assembly. Presenting budgetary proposals before the House on Tuesday afternoon, Finance Minister Ishaq Dar said economic reforms and difficult decisions taken by the government during the last one year are now yielding positive results and these will lead to further strengthening of economy and resolving the problems of people.
He said despite hurdles and tough economic conditions the government remained committed to bring economy back on track and now the country is on the road to economic development.
He said the successes of the government are the fruit of the strengthening of democracy in the country as now people’s representatives are fully active for the welfare of people. He said objectives of the reforms were to maintain price stability, create job opportunities and reconstruct the infrastructure.
The Finance Minister said the country is on the way to progress because of the implementation of a broad-based economic agenda.
Ishaq Dar announced a ten percent ad-hoc relief for the salaried persons of the Federal Government from 1st of July this year. He said ten percent increase will be allowed to those employees upto 15 grade drawing fix medical allowance of one thousand rupees per month.
He said five percent increase will be allowed in conveyance allowance of the employees working upto fifteen grade. He said post of superintendent is being upgraded from 16 to 17 grade. Similarly one pre-mature increment will be allowed to employees of grade one to four.
He said for the welfare of the labour class, the minimum wage is also being increased from ten thousand to eleven thousand rupees per month.
He said an increase of one thousand rupees in minimum pension is being made in view of difficulties being faced by the low pension employees. He said it will raise minimum pension upto six thousand rupees in.
Finance Minister while referring to relief measures contained in the new budget said the income support levy introduced last year is being abolished because of reservations of some sections of the society.
He said to ensure continued stability in stock market, it is proposed that capital gain tax rate will be 12.5 percent for securities held upto 12 months and ten percent for securities held for a period of twelve to 24 months. He said securities held for more than twenty-four months shall be exempted from this tax.
Ishaq Dar said to achieve the vision of an industrialised Pakistan in foreseeable future the Government wants to attract both the domestic and foreign investment into manufacturing sector. He said tax rebate will be allowed till 2017 in order to attract foreign direct investment in manufacturing, construction and housing sectors. He said the government has proposed concessions in the agriculture to encourage farming by removing customs duty on the import of plastic coverings and mulch film etc.
He said corporate tax in the next financial year will be up to 33 percent while withholding tax on marriage functions is being reduced by five percent. The government feels that disabled persons need special consideration therefore it is being proposed to reduce tax liability of such persons having income upto one million rupees by fifty percent.
Ishaq Dar announced special initiatives to enhance exports especially of textile. He said the government has decided to set up export import bank of Pakistan to enhance export and reduce cost of borrowing for exporters on the long term basis with authorized capital of hundred billion rupees having initial paid up capital of ten billion rupees. He said the government also decided to reduce markup rate on exports finance from 9.4 to 7.5 percent.
He said it has also been decided to set up Pakistan Land Port Authority to transform land ports into efficient facilitators of trade. He said the authority will help boost exports.
The Finance Minister announced various measures to strengthening textile sector for promotion of its exports by increasing cotton yield through various means. He also announced several measures to improve agriculture sector including credit guarantee scheme for small and marginalized farmers and reimbursement of crops insurance scheme.
The Finance Minister said the government is going to introduce livestock insurance scheme for all farmers getting finance for up to ten cattle. This scheme will cover livestock insurance in case of calamity and diseases and will benefit one hundred thousand livestock farmers.
The Finance Minister said the government has specially designed a programme to provide housing credit to low cost housing units to enable the poor to have their own homes. He said the banks will provide loans up to one million rupees for the scheme and the government will guarantee forty percent of the portfolio amount. The scheme will cover all areas of Pakistan and twenty-five thousand loans worth twenty billion rupees will be provided through this innovative method of supporting low and middle income facilities. He said to expedite construction activities in housing sector; House Building Finance Corporation will be rehabilitated.
Ishaq Dar said to ensure prompt health care facilities to the maximum population of the country, the government has decided to introduce health insurance scheme with the involvement of provincial governments which will help protect the poor.
Giving details of tax proposals, the Finance Minister said it is proposed that airlines may collect advance tax of three percent on the sale of first class and Club class air tickets.
He said it is being proposed that advance tax of one percent may be collected on the purchase of immoveable property; however, properties with the value of two million rupees and schemes introduced by the government for the expatriate Pakistanis will be exempted from this tax.
The Finance Minister said to ensure due contribution from the rich and discourage consumption, seven point five percent adjustable advance tax on monthly bill of one hundred thousand rupees and above on domestic electricity consumers is being proposed.
He said the government has made a conscious policy decision to enhance the contribution of taxes which are progressive taxes and gradually reduce the burden of indirect taxes which affect the common man. Therefore, no new tax has been imposed in connection with sales tax and federal excise duty. He said main objective of the government is to broaden the tax net, increase the cost of noncompliance for those who remain outside the tax net, remove distortion and anomalies and promote automation in order to reduce interaction between tax payers and tax collector.
Ishaq Dar said to facilitate exporters it has been decided to introduce a consolidate export facilitation scheme which will be implemented after broad based consultations with exporters. He said accordingly the government has also decided to form tax reforms commission with the objective to review the entire tax policy and tax administration.
The Finance Minister said the government has established Pakistan Development Fund Limited Company with resources of 157 billion rupees. The company will provide the financing to key infrastructure projects and promote public private partnership.
He said the government has revived its efforts to promote Islamic Banking and Financial system and a committee comprising ulema, bankers, economists and government officials has been constituted which will finalise its recommendations by December this year.
Ishaq Dar said the budget strategy is embedded in a three- year medium term macro-economic framework with increase in GDP growth rate upto seven percent by the end of 2016-17. He said similarly inflation rate will be maintained in single digit throughout the medium term.
He said investment to GDP ratio will rise to twenty percent at end of medium term while fiscal deficit will be brought down to four percent of DGP by 2015-16. He said tax to GDP ratio will be increased by thirteen percent by 2016-17. He said foreign exchange reserves will go up over twenty two billion dollars by the end of this period.
He said the government is committed to create new job opportunities for youth and hoped that introduction of 3G and 4G technologies in telecom sector will help create about nine hundred thousand new jobs in next four years.
The Finance Minister said the government has planned to increase public sector development programme up-to 525 billion rupees in the coming financial year, which shows twenty four percent increase as compared to the outgoing year.
Giving details of the Public Sector Development Programme, the Finance Minister said special focus will be laid on construction of new water reservoirs to give boost to the agriculture sector besides generating cheap electricity. He said physical work on Diamer Bhasha Dam will be launched in the next financial year, which will store four point seven million acre feet water and generate 4500 mw electricity. He said special focus will be laid on completion of small dams and canals in Balochistan particularly delayed project of Kachi Canal.
He said special focus will continue to be laid on the development of power sector by launching and completing hydroelectric power schemes throughout the country. For this purpose 205 billion rupees will be invested in this sector during the next fiscal year.
He said similarly a number of coal based project besides wind energy and nuclear projects launched by the sitting government will help provide cheap electricity to the people.
Ishaq Dar said to encourage establishment of processing units in Gilgit Baltistan, Swat, Makran and FATA regions, the government is introducing a policy to support processing projects in these areas. These units will have the facility of duty and tax free import of machinery and five years tax holiday. Similarly the government has also decided fifty percent air freight subsidy for horticulture produce of Gilgit Baltistan.
The Finance Minister said Pakistan and China have agreed to build economic corridor from Kashgar to Gwadar and Karachi Lahor Motorway project which is part of this corridor will be launched by the end of this year. He said government has also planned to complete seventy four ongoing highways and bridges projects including Faisalabad-Multan sector of Motorway besides other roads and bridges in various parts of the country.
He said railway plays a vital role in national economic therefore; government has embarked on a plan for its revamping and rehabilitation. He said every possible step will be taken to make Pakistan Railways a profitable organization which could provide better travelling facilities to the people.
On Human Resources Development, the Finance Minister said twenty billion rupees are being earmarked for 188 projects in the Higher Education Sector.
Similarly he said special focus will be laid on expanded programme of immunization and other health schemes for the people. He said funding for the provincial programmes for population welfare has been kept at eight point two billion rupees.
The Finance Minister while giving budget estimates for the next financial year said gross revenue receipts are estimated at 3945 billion rupees.
He said the government has set an ambitious target of tax collection as without collecting more taxes we cannot hope to increase development spending that is crucial for economic growth.
He said the share of the provincial governments out of these taxes will be 1720 billion rupees as compared to 1413 billion in the outgoing year which shows twenty two percent increase.
The Finance Minister said total expenditure during the next fiscal year has been estimated at 3937 billion rupees showing an increase of two percent comparing the outgoing year.
He said the budgetary needs of armed forces as per their needs have been duly provided in the next budget.
The Finance Minister said government has been successful in bringing down budget deficit from 8.2 percent to 5.8 percent during the last one year and is hopeful to further reduce to 4.9 percent in the coming year.
He said the State Bank has decided to enhance overall credit for small growers up-to five hundred billion rupees in the next financial year. Similarly he said to encourage the use of tractors by the growers it is proposed that sales tax will continue to be charged at the reduced rates of ten percent.
The Finance Minister said that for protection of poor segments of society the government has designed National Income Support programme which consists of Prime Minister’s Youth programme and Benazir Income Support Programme. He said to strengthen these programmes it has been decided to establish a high powered task force to undertake a detailed review of the programme’s performance and assess their effectiveness.
Ishaq Dar said the government under the leadership of Prime Minister Nawaz Sharif has started a journey of sustainable economic growth of the country under the most challenging circumstances. He said government is committed to achieve the goals of economic prosperity and well-being of the people with the strengthening of democratic system with the help of all stake holders. He said the country which is in the grip of terrorism for the last one decade needs peace and political stability. He said civilized nations address their issues through constitutional way and the government will open-heartedly welcome any positive remarks, criticisms and suggestions aiming at bringing about ratification and improvement.