Tough decisions taken to stabilise economy: Shaikh

Top priori­ty is to reduce fiscal defici­t that fuels inflat­ion.

ISLAMABAD:

Finance Minister Dr Abdul Hafeez Shaikh has brushed aside the assertion that the upcoming financial year’s budget has nothing for the poor, saying the government has taken tough decisions to stabilise the economy.

Winding up the debate on budget in the Senate on Wednesday, Shaikh said no tax had been imposed on medicines, agricultural products and essential commodities. “We have totally abolished special excise duty while regulatory duty on 392 items has been removed,” he added.

“We are passing through a transitional period and have tried our best not to increase the problems of the people,” he said.

The minister highlighted the challenges faced by the economy last year and said the country faced serious shocks from floods and war against terror.

During the debate on Finance Bill 2011-12, lawmakers irrespective of party lines had censured the government for withdrawing subsidies that provided some relief to the poor and for its helplessness in controlling inflation. Shaikh reiterated the recipe for self-reliance and asked people to contribute and pay due taxes. “Everyone whether he is a parliamentarian, media mogul or business tycoon must pay his tax,” he added.

Though he conceded that the government had failed in generating new jobs, he said the government had taken steps in this direction and would facilitate private sector in job creation.

“We have offered five years of tax exemption to the private sector for setting up new industries to contribute to economic growth and generate employment opportunities,” he added.

The minister said the top priority of the government in the budget was to reduce fiscal deficit, which was a major factor behind inflation in the country.

Pointing out measures taken to support the economy, he said freezing of current expenditure at last year’s levels and some other expenditure control steps would help save Rs20 billion.

He said efforts were being made to bring all potential income-generating sectors into the tax net. “We have identified 700,000 (wealthy) people who were not paying tax, of which 77,000 have been issued notices and 10,000 have already responded and 1,000 have paid taxes.”

He said the allocation for development programme was Rs730 billion for the next fiscal year and revised revenue collection target of Rs1,588 billion for the current year would be achieved.

The minister assured the House that allocation for the Benazir Income Support Programme (BISP) would be increased in 2011-12 while funds for health and education had been increased by 32 per cent. Though health and education were provincial subjects, the government would continue to fund the Higher Education Commission (HEC) along with ongoing projects of health, he added.

He said under the seventh National Finance Commission Award an additional Rs700 billion would go to the provinces, which would be utilised in sectors such as education, health, clean drinking water and civic services, which would help improve living standards of people.

Published in The Express Tribune, June 16th, 2011.