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  • PTI government unveils Rs7,022bn austerity budget

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    The Pakistan Tehreek-e-Insaf (PTI) led federal government on Tuesday unveiled a Rs7,022 billion austerity budget for the fiscal year 2019-20, setting ambitious tax revenue targets to stabilise a faltering economy.

    30 percent greater than the previous year, the Rs7,022bn budget sets an ambitious Rs5,555bn target for the Federal Board of Revenue—a 25% increase over the Rs4,435bn tax collection target for the FBR from the previous year.

    "A challenging target of Rs5,555bn FBR revenue collection will be combined with aggressive expenditure controls to reduce primary deficit to 0.6% of GDP," said State Minister for Revenue Hammad Azhar presenting the budget in the National Assembly.

    He said the ambitious increase in tax revenue would be combined with "unprecedented reduction in expenditure" by both the civil administration and the military to bridge the widening gap between the government's revenue and expenses.

    The government says the budgetary proposals are focused on economic stability and sustainable growth, with an emphasis on austerity, revenue generation, and uplift of downtrodden segments of society.

    The special budget session of the National Assembly was marred by protests from opposition parties, which accused the government of presenting a budget "dictated" by the International Monetary Fund (IMF), from which the government has secured a provisional agreement a $6bn bailout contingent on measures to cut a rising budget deficit.

    Budget features

    Total budget outlay Rs7,022bn—30% greater than previous year

    Rs1,863 billion fixed for Public Sector Development Programme

    Budget deficit to be Rs3,560 billion

    Tax revenue target set at Rs5,822bn

    FBR tax revenue target set at Rs5,555bn

    Non-tax revenue target set at Rs894.5bn

    Current expenditure set at Rs6,192bn

    Development expenditure set at Rs843.4bn

    Rs701bn earmarked for Federal PSDP

    Rs1,152bn fixed for Defence Affairs and Services expenditures

    Civil government expenditure to be Rs431bn

    Higher education expenditure of Rs45bn

    Government sets aside Rs271bn for subsidies

    Inflation targets set at between 5 and 7 per cent

    General sales tax on goods to remain at 17 percent

    3% value added tax on import of mobile phones eliminated

    Rs5,200 FED proposed on every 10,000 cigarettes

    Sales tax on sugar proposed to be be increased to 17 percent

    Rs40 billion subsidy to be given for electricity, gas

    Development expenditure for tribal districts fixed at Rs152 billion

    Rs45.5 billion allocated for Karachi’s development programme

    Stipend through BISP scheme increased from Rs5,000 to Rs5,500

    Govt aims to eliminate circular debt in coming years

    The government has formed a new ministry to eliminate poverty, which will introduce programs for social safety. People benefiting from the Ehsaas program include

    the poor, orphaned, homeless, and disabled sectors of the population.

    Ration card scheme being introduced. 80,000 people to benefit from this scheme with interest-free loans.

    Taxes:

    Minimum taxable income for salaried class to be Rs0.6mn per annum

    11 progressive tax slabs ranging from 5 to 35 percent proposed for salaried class

    Minimum taxable income for salaried class to be Rs0.4mn p.a.

    Eight progressive tax slabs ranging from 5 to 35 percent proposed for non-salaried class

    Non-filers no more restricted from purchasing property

    Non-filers to be allowed to purchase property of over Rs5mn

    Corporate tax to remain at 29 percent for next two years

    Wages:

    10 per cent increase in salaries for government employees from grade 1 to 16, including armed forces employees

    5 per cent ad hoc relief for government employees from grade 17 to 20

    No increase in salaries for civilian government employees from grade 21 to 22

    Minimum wage set at Rs17,500

    Pensions increased by 10 per cent

    Ministers agree to voluntary 10 per cent cut in salaries

    Opposition members protest

    During the budget presentation, members of the opposition protested in front of the NA speaker's dais.

    Opposition members chanted slogans against the government and Prime Minister Imran Khan.

    Hammad Azhar presents budget

    The federal budget 2019-20 is being presented by Minister of State for Revenue Hammad Azhar.

    "There has been no increase in exports in the past five years," he said.

    "Due to financial mismanagement, the deficit reached Rs2260bn. Circular debt in the energy sector reached Rs1200bn."

    The minister said measures taken by the PTI-led government have resulted in remittances rising by $2bn, and Rs12bn decrease per month in circular debt in the energy sector.

    Azhar added that the 11 per cent tax to GDP ratio currently, was the lowest in the region. There were only 50 per cent of SECP registered companies paying tax. "We will have to change this culture."

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