The government announced on Wednesday that it will not levy any new tax in the next year’s budget in order to provide relief to the public — a move primarily hinting at the ruling party’s efforts to appease voters before the next general elections.
The decision was taken at a meeting of the finance ministry with the prime minister to discuss the broader parameters of next year’s budget and review performance of the current year
A source in the ministry of finance revealed that the government decided that if the need arose, it may increase tax rate itself, but no new taxes will be introduced.
A senior official of the ministry told The Express Tribune that the process of simplification of taxes would also continue in next year’s budget. The government has also decided to hold a few more meetings to finalise broader parameters of the next budget.
The official privy to the development said that the main purpose of the budget will be “to provide relief to the masses”.
For the current fiscal year, the government has allocated Rs300 billion for public sector development programme. According to a handout of the Prime Minister House, the government would utilise 100 per cent budget. It said during first seven months, Rs221 billion have already been released.
The Prime Minister directed that budget should reflect a focus on economic stability, prudent fiscal policy, generation of economic opportunities for the youth and protection of the vulnerable groups through further control of inflation and social safety net programme, said the PM House.
The meeting focused on four basic areas: overall state of the economy, expenditure management, revenue expansion and the public sector development programme.
The premier was briefed that the projected growth rate of 3.6 per cent is likely to be achieved and inflation will be lower than the budgetary projection of 12 per cent.
While the economic team claimed that it implemented prudent economic policy during first seven months of the fiscal year, the reality seems contrary to that. From July through January, the budget deficit remained at Rs1,047 billion or 5% of total size of national economy — Rs 62 billion (0.3%) higher than the annual revised projection of 4.7%.
The premier was informed that from July through January exports registered an increase of 7% as compared to the corresponding period of the previous financial year. The ministry has also provided the prime minister with receipts-based data. While on the basis of the actual shipment during this period, exports marginally grew by 0.25%.
The prime minister was briefed that remittances by the overseas Pakistanis remained at $7.4 billion in the first seven months registering a 21% increase.
The Federal Board of Revenue assured the premier that it would be able to achieve Rs1,952 billion in annual collection targets. Authorities have so far collected Rs975 billion with an increase of 26% as compared to the corresponding period of last fiscal year.
Published in The Express Tribune, February 23rd, 2012.