ISLAMABAD: Finance Minister Ishaq Dar will announce government’s second budget for the fiscal year 2014-2015 with total expenditures of around Rs 3.9 trillion and deficit of 4.8 per cent of the Gross Domestic Product.
Dar will present the budget 2014-2015 in the National Assembly. The government would introduce heavy taxation measures in the budget to meet the fiscal deficit target of 4.8 per cent as dictated by International Monetary Fund.
The minister will present two options regarding increase in pay and pension at the cabinet meeting to be held with Prime Minister Nawaz Sharif in the chair. Under the first proposal, the Finance Ministry would suggest increasing the salaries by 10 per cent across the board while in the second suggestion the ministry will propose to enhance salaries of employees in BS-1 to BS-16 by 15 per cent and 10 per cent for BS-17 officers and above.
FBR’s tax collection target is Rs 2.81 trillion. Non-tax collection target is Rs 817 billion. The government has proposed defence budget 10 percent higher than that of the outgoing fiscal year. Defence budget would be around Rs 700 billion. Public Sector Development Programme (PSDP) has been allocated Rs 525 billion. The government has estimated subsidies at Rs 229 billion, Rs 215 billion for paying pensions to retired employees and Rs 285 billion for federal government service delivery.
The provinces are expected to receive Rs 1,703 billion in the next fiscal year under National Finance Commission transfer. Grants to the provinces are estimated at Rs 35 billion in 2014-15 against Rs 52 billion projected in the budget for the current fiscal year, which have now been revised and raised to Rs 55 billion. Other grants are estimated at Rs 479 billion for the next fiscal year against Rs 474 billion estimated in the budget for the current fiscal year and a downward revised projection of Rs 381 billion.
Meanwhile, Rs 1,347 billion have been earmarked for debt servicing, which is 17 per cent higher than that in the current fiscal year’s budget. Similarly, the government has allocated Rs 85 billion for Benazir Income Support Programme (BISP).
On the taxation part, the government has decided to introduce heavy taxation measures in the budget by eliminating tax exemptions as well as new revenue generation steps. The government would introduce around Rs 240 billion new taxation measures in the budget.
The revenue impact of withdrawal of exemptions through SROs has been estimated at around Rs 70 billion whereas the remaining amount could be raised through taxation measures of sales tax, income tax, and federal excise duty which have been estimated at around Rs 70 billion. Measures in relation to direct taxes have been estimated at over Rs 100 billion for 2014-15.
The government would impose 10 per cent withholding tax on foreign air tickets. Similarly, the government would enhance withholding tax rates from 6 to 10 per cent on professionals like doctors, dentists, lawyers, chartered accountants and others. The government would also impose withholding tax on the purchase of properties in the country.
Around Rs 17 billion would be generated through a new FED structure on all brands of cigarettes. The imposition of the FED on certain items and restoration of excise duty on certain items would generate Rs 6 to 8 billion. Federal excise duty on cement would also be enhanced. The government has rejected a major budgetary measure of imposition of special excise duty (SED) on the import and local manufacturing of goods. The projected revenue from the measure was Rs 10 billion in FY 2014-15.
Other taxation proposals include import duty on imported cars and increase in withholding tax on electricity and gas bills for non-taxpayers of the country. Similarly, the government has planned to enhance withholding tax on cash withdrawals from banks from existing 0.3 to 0.5 per cent in the upcoming budget 2014-2015.
