Pakistan’s Budget 2020-21 focussed on relief to common people and economic growth – Hafeez Sheikh
ISLAMABAD (The HQ) – Hafeez Sheikh the Adviser to Prime Minister Pakistan on Finance has said the budget for next fiscal year is focused to cope with the impacts of COVID19 and provide relief to the common people.
He was addressing post budget news conference in Islamabad today [Saturday] along with Federal Minister for Information & Broadcasting Mr. Shibli Faraz and Federal Minister for Industries and Production Mr. Hammad Azhar.
Shiekh said the key priority and facility in this budget is that no new tax has been imposed while concessions upto fifty billion Pak Rupees have been given in taxes and duties to support the industrial sector and create job opportunities.
He added that the PTI led government has taken the difficult decisions of cutting its own expenditures keeping in view the problems faced by the common people. He said the development outlay has been set at PKR. 650 billion while allocations for “Ehsaas Program” have been enhanced to protect the vulnerable segments of the society.
Giving a breakup of the relief given in taxes, Shiekh said:
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taxes and duties are being abolished on the testing kits of corona/COVID19 virus and cancer diseases.
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regulatory duty on 1623 tariff lines of raw materials are totally being withdrawn while on others including those related to engineering sector are also being reduced.
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ten different types of withholding tax are being abolished.
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massive relief has been given to different sectors especially the construction.
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Capital Gains Tax is being halved whilst the federal excise duty on cement has been
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Sales tax for the retailers opting to link themselves with the FBR is being reduced to 12 %.
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duty on hospitality sector is being reduced from 1.5 percent to 0.5 percent.
Shiekh while responding to questions by media replied that present government has been striving to increase per capita income and national savings. He said tax collection and national savings have historically been low in Pakistan, but we are committed to increase their rates. He said if we increase income of people, this will enable them to save more. He stressed that in order to increase per capita income the Pakistani nation needs to create a balance between overall income and overall population.
He also said that the process of privatization has been expedited in the country and will be further expanded to bring efficiency in the public sector.
Responding to another question, he said increase of PKR.1000 billion in target of FBR has been made to enhance national income. We are also taking steps to increase tax base of the country. Shiekh said it is difficult to predict about the exports in near future due to prevalent situation of corona pandemic. He said provinces are independent to devise their own tax collection targets based on realistic situation.
He said first and foremost priority of the government is to preserve the employment of people.
He told a questioner that condition of providing Identity Card for purchase over 50,000 rupees has been revised to shopping of over 100, 000 rupees to facilitate people. He said we are committed on documentation of economy but at the same side we want to provide maximum relief to the people.
Hafeez Shaikh said inflation target for next year is 6.5 percent which is less than this year. He said government is committed to pass on the benefit of decline in international oil prices to people. He said changes will be witnessed in regulatory regime of oil soon.
On a question, he said the budget is for the next financial year, but amendments can be made in certain areas if need arises. Dispelling misperception of any dictation from the IMF, the Adviser said IMF is an international body and provides loans to countries to help stabilize their economies. It depends on countries to manage their expenditures according to their resources.
When asked about the petroleum levy rate, the Adviser said it has not been increased in the country and neither the government has any intention of it from existing thirty rupees per liter. The prices of petroleum have been reduced on the direction of Prime Minister to provide maximum relief to the public.
Minister for Industries Hammad Azhar said private sector is the engine of job creation. Our focus is on preservation of economy so that it runs smoothly and creates employment opportunities. He said we have improved our ranking in Ease of Doing Businesses and hope it will further improve next year. He said increase has been made in allocations for PSDP and a cash injection of fifty billion rupees has been made to SME sector to help it create jobs. Hammad Azhar said we have also given a number of incentives to construction sector because it creates employment.
Sheikh stressed that the biggest hurdle in economic reforms that the PTI led government is facing are the massive loans of the previous governments for which PTI led government took loans only to clear the loans taken by the past governments – as a result of which PTI led govt. paid back PKR. 2,700 billion of loans last year and this year PKR. 2,900 billion of loans have to be repaid.