Dar unveils Budget 2017-18 with Rs4.75 trillion outlay
Tax incentives and relief announced for IT and agriculture sectors
Finance Minister Ishaq Dar (R) presents the annual budget at the National Assembly as Prime Minister Nawaz Sharif (L) reads a copy of the budget in Islamabad on June 12, 2013. PHOTO: AFP / FILE
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Finance Minister Ishaq Dar unveiled the last budget of the Pakistan Muslim League-Nawaz (PML-N) government with a total outlay of Rs4.75 trillion.
Already the country’s economy has gone past the 5% threshold this year and Pakistan has now set a target of 6% Gross Domestic Product growth for the upcoming fiscal year. It has earmarked Rs1.001 trillion for the Public Sector Development Programme – a key indicator of development work going on in the country – which is 25% more than last-year’s allocation.
‘Historic’ Rs1.001 trillion allocated for development budget
All eyes were on the finance minister as he announced pro-business measures to boost economic growth and push Pakistan among the ranks of leading economies, as he mentioned during the unveiling of the Economic Survey 2016-17 a day ago as well as today.
Many sectors of the economy hoped that the government will come up with some incentives and concessions to help them cope with the challenges of modern times as competition gets stiffer day by day.
Priority was also given to PM’s pet schemes in an election year.
Salaries, pensions of federal govt, army personnel
Salaries of army officers to be increased by 10% in addition to a ‘special allowance’ — 10% of their income, would be given, says Dar.
“Pensions of federal government employees and army personnel will be increased by 10%,” he adds.
"Salaries of government employees will be increased by 10%."
Further, the finance minister says minimum wage has been increased from Rs14,000 to Rs15,000.
Pakistan Development Fund
Pakistan will raise $1 billion through a special convertible bond for overseas Pakistanis, says Dar.
Loan write-off for widows
The government will pay off the pending loans that amount up to Rs500,000 on the behalf of widows, says the finance minister.
War on terror
A new special financial scheme for families of martyred soldiers, police personnel will be introduced, says Dar.
Automobile sector
A package to be announced on import of hybrid vehicles in the near future, says the finance minister.
New taxes
A new 5% withholding tax on tobacco production to be imposed, says Dar.
“Sales tax on steel sector will be increased from 9% to 10.5%.”
Construction sector
Criticising builders and developers for contributing a meager Rs110 million in taxes during the outgoing fiscal year, Dar says the ‘special taxation regime’ for the Association of Builders and Developers (ABAD) will be taken back in 2017-18.
“The government collected Rs2.6 billion in taxes from ABAD during the previous regime. This time, a meager Rs110 million was recorded,” says a visibly angry finance minister.
Federal Excise Duty (FED) on cement has been increased from Rs1 to Rs1.25 per kilogramme, adds Dar.
Corporate tax
The rate of corporate tax has been reduced to 30% for 2017-18, says Dar.
The rate was 35% in 2012-13 and has seen a yearly reduction of one percentage point.
In addition, the tax relief for newly listed companies has been extended for another three years, he says.
Defence budget
The defence budget allocation for 2017-18 has been increased to Rs920 billion, says Dar.
Salaries of federal govt, army personnel
Salaries of army officers to be increased by 10% in addition to a ‘special allowance’ — 10% of their income, would be given, says Dar.
IT sector
New IT companies will be a given a tax break of three years, says the finance minister.
“Withholding tax on mobile phone calls has been reduced from 14% to 12.5%. Sales tax on mobile phone calls has also been reduced from 18% to 17%,” says Dar.
"An IT park at a cost of Rs6 billion will be established with assistance from South Korea."
Banking sector
In a bid to promote financial inclusion, withholding tax on branchless banking is being abolished, says Dar.
"In order to facilitate transactions through mobile banking, e-gateway
systems, the government is establishing a state-of-the-art e-gateway system at the State Bank of Pakistan at a cost of Rs200 million."
Agriculture sector
Lending rate for farmers will now be reduced from an average of 14-15% to 9.9%, says Dar. "This will be for farmers with a landholding of up to 12.5 acres."
Target of agriculture credit has been increased from Rs700 billion to Rs1.001 trillion for next fiscal year.
"Urea prices are being maintained for the time being. The decision to either grant them subsidy or reduce the rate of sales tax will be taken in the time to come."
The government is also abolishing customs duty and sales tax on import of combined harvest machinery, he says.
Import of hybrid seeds will also be exempted from duty, he adds.
BISP
The number of families in the Benazir Income Support Programme (BISP) will increase from 3.7 million to 5.5 million, says the finance minister.
"An additional 1.3 million children will also be facilitated through the programme."
Targets for next fiscal year
Dar says the government has set a GDP growth target of 6% for the next fiscal year, and will look to reduce the budget deficit to 4.1%.
In the outgoing year, Pakistan's GDP growth amounted to 5.28% and fiscal deficit is set to clock in 4.2% by June-end.
Women empowerment
Through the Companies Bill, women have been empowered and will now feature in the board of directors, says Dar.
Progress of Pakistan Stock Exchange
Dar did not want to let go off the opportunity to mention the success of the country's stock market.
He says the market capitalisation – value of all shares – has gone up from $51 billion to over $97 billion in four years.
The Pakistan Stock Exchange's (PSX) KSE-100 Index gave a return of over 45% in dollar terms in calendar year 2016. It was Asia's top-performing market and the fifth in the world.
Dar says the merger of three exchanges – Islamabad, Lahore, and Karachi – should be credited.
"MSCI has already upgraded the PSX and it will be an emerging market from June 1."
Tax collection
In 2012-13 the Federal Board of Revenue (FBR) collected Rs1,940 billion and the revenue now stands at Rs3,521 billion for an increase of 81% in four years, says Dar.
The surge in tax collection has come at the back of PML-N's efforts to penalise non-filers, but is also the result of an increase in indirect taxation.
'No load-shedding for industrial sector'
Dar says there was no load-shedding for the industrial sector. A visible reduction in load-shedding was seen for domestic households, adds the finance minister.
Opposition members attend NA session wearing black bands.
Opposition announces walkout
Addressing the lawmakers in the National Assembly, Leader of the Opposition Khursheed Shah says, "We will walkout of the House in protest against the mistreatment to farmers who were only demanding their rights."
"Today, the government created chaos in the capital by mistreating farmers who were protesting even outside the red zone," he says. "The authorities used shelling to disperse farmers and they were manhandled."
Shah asks the NA speaker why the opposition wasn't allowed to speak, terming it a sign of dictatorship.
In a historic development, National Assembly Speaker Ayaz Sadiq allows Leader of the Opposition Syed Khursheed Shah to pass opening remarks.
Finance Minister Ishaq Dar willingly steps back to allow Shah make a statement.
[/fbvideo]
Finance Minister Ishaq Dar unveiled the last budget of the Pakistan Muslim League-Nawaz (PML-N) government with a total outlay of Rs4.75 trillion.
Already the country’s economy has gone past the 5% threshold this year and Pakistan has now set a target of 6% Gross Domestic Product growth for the upcoming fiscal year. It has earmarked Rs1.001 trillion for the Public Sector Development Programme – a key indicator of development work going on in the country – which is 25% more than last-year’s allocation.
‘Historic’ Rs1.001 trillion allocated for development budget
All eyes were on the finance minister as he announced pro-business measures to boost economic growth and push Pakistan among the ranks of leading economies, as he mentioned during the unveiling of the Economic Survey 2016-17 a day ago as well as today.
Many sectors of the economy hoped that the government will come up with some incentives and concessions to help them cope with the challenges of modern times as competition gets stiffer day by day.
Priority was also given to PM’s pet schemes in an election year.
Salaries, pensions of federal govt, army personnel
Salaries of army officers to be increased by 10% in addition to a ‘special allowance’ — 10% of their income, would be given, says Dar.
“Pensions of federal government employees and army personnel will be increased by 10%,” he adds.
"Salaries of government employees will be increased by 10%."
Further, the finance minister says minimum wage has been increased from Rs14,000 to Rs15,000.
Pakistan Development Fund
Pakistan will raise $1 billion through a special convertible bond for overseas Pakistanis, says Dar.
Loan write-off for widows
The government will pay off the pending loans that amount up to Rs500,000 on the behalf of widows, says the finance minister.
War on terror
A new special financial scheme for families of martyred soldiers, police personnel will be introduced, says Dar.
Automobile sector
A package to be announced on import of hybrid vehicles in the near future, says the finance minister.
New taxes
A new 5% withholding tax on tobacco production to be imposed, says Dar.
“Sales tax on steel sector will be increased from 9% to 10.5%.”
Construction sector
Criticising builders and developers for contributing a meager Rs110 million in taxes during the outgoing fiscal year, Dar says the ‘special taxation regime’ for the Association of Builders and Developers (ABAD) will be taken back in 2017-18.
“The government collected Rs2.6 billion in taxes from ABAD during the previous regime. This time, a meager Rs110 million was recorded,” says a visibly angry finance minister.
Federal Excise Duty (FED) on cement has been increased from Rs1 to Rs1.25 per kilogramme, adds Dar.
Corporate tax
The rate of corporate tax has been reduced to 30% for 2017-18, says Dar.
The rate was 35% in 2012-13 and has seen a yearly reduction of one percentage point.
In addition, the tax relief for newly listed companies has been extended for another three years, he says.
Defence budget
The defence budget allocation for 2017-18 has been increased to Rs920 billion, says Dar.
Salaries of federal govt, army personnel
Salaries of army officers to be increased by 10% in addition to a ‘special allowance’ — 10% of their income, would be given, says Dar.
IT sector
New IT companies will be a given a tax break of three years, says the finance minister.
“Withholding tax on mobile phone calls has been reduced from 14% to 12.5%. Sales tax on mobile phone calls has also been reduced from 18% to 17%,” says Dar.
"An IT park at a cost of Rs6 billion will be established with assistance from South Korea."
Banking sector
In a bid to promote financial inclusion, withholding tax on branchless banking is being abolished, says Dar.
"In order to facilitate transactions through mobile banking, e-gateway
systems, the government is establishing a state-of-the-art e-gateway system at the State Bank of Pakistan at a cost of Rs200 million."
Agriculture sector
Lending rate for farmers will now be reduced from an average of 14-15% to 9.9%, says Dar. "This will be for farmers with a landholding of up to 12.5 acres."
Target of agriculture credit has been increased from Rs700 billion to Rs1.001 trillion for next fiscal year.
"Urea prices are being maintained for the time being. The decision to either grant them subsidy or reduce the rate of sales tax will be taken in the time to come."
The government is also abolishing customs duty and sales tax on import of combined harvest machinery, he says.
Import of hybrid seeds will also be exempted from duty, he adds.
BISP
The number of families in the Benazir Income Support Programme (BISP) will increase from 3.7 million to 5.5 million, says the finance minister.
"An additional 1.3 million children will also be facilitated through the programme."
Targets for next fiscal year
Dar says the government has set a GDP growth target of 6% for the next fiscal year, and will look to reduce the budget deficit to 4.1%.
In the outgoing year, Pakistan's GDP growth amounted to 5.28% and fiscal deficit is set to clock in 4.2% by June-end.
Women empowerment
Through the Companies Bill, women have been empowered and will now feature in the board of directors, says Dar.
Progress of Pakistan Stock Exchange
Dar did not want to let go off the opportunity to mention the success of the country's stock market.
He says the market capitalisation – value of all shares – has gone up from $51 billion to over $97 billion in four years.
The Pakistan Stock Exchange's (PSX) KSE-100 Index gave a return of over 45% in dollar terms in calendar year 2016. It was Asia's top-performing market and the fifth in the world.
Dar says the merger of three exchanges – Islamabad, Lahore, and Karachi – should be credited.
"MSCI has already upgraded the PSX and it will be an emerging market from June 1."
Tax collection
In 2012-13 the Federal Board of Revenue (FBR) collected Rs1,940 billion and the revenue now stands at Rs3,521 billion for an increase of 81% in four years, says Dar.
The surge in tax collection has come at the back of PML-N's efforts to penalise non-filers, but is also the result of an increase in indirect taxation.
'No load-shedding for industrial sector'
Dar says there was no load-shedding for the industrial sector. A visible reduction in load-shedding was seen for domestic households, adds the finance minister.
Opposition members attend NA session wearing black bands.
Opposition announces walkout
Addressing the lawmakers in the National Assembly, Leader of the Opposition Khursheed Shah says, "We will walkout of the House in protest against the mistreatment to farmers who were only demanding their rights."
"Today, the government created chaos in the capital by mistreating farmers who were protesting even outside the red zone," he says. "The authorities used shelling to disperse farmers and they were manhandled."
Shah asks the NA speaker why the opposition wasn't allowed to speak, terming it a sign of dictatorship.
In a historic development, National Assembly Speaker Ayaz Sadiq allows Leader of the Opposition Syed Khursheed Shah to pass opening remarks.
Finance Minister Ishaq Dar willingly steps back to allow Shah make a statement.
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