The government has presented budget for the fiscal year 2015-16 with a total outlay of Rs 4.451 trillion, but has introduced massive taxation measures worth Rs 253 billion to reach the ambitious revenue collection target of Rs 3.1 trillion. The budget is 12.8 percent higher than the 2014-15 outlay of Rs 3.945 trillion while the tax collection target is Rs 500 billion more than the previous year’s target. The tax collection target for the outgoing year was Rs 2.6 trillion with a growth of more than 19 percent while the government has imposed new taxes and withdrawn tax exemptions worth billions of rupees. The government has also introduced new customs duties worth Rs 41. 95 billion, sales tax and federal excise duty of Rs 54 billion and income tax of Rs 142.3 billion in the budget.
The government has opted for one of the major taxation measures of Rs 35 billion, that is adjustable advanced income tax at the rate of 0.6 percent of the amount of transaction that is proposed to be collected on all banking instruments and other modes of funds transfer from non-filers of income tax. The government believes the difference of withholding tax rates between filers and non-filers will generate another Rs 23 billion while increase in the rate of federal excise duty on cigarettes will generate Rs 12 billion. The government also hopes that rationalising tax rates for various sources of banking companies will generate Rs 6 billion. However, experts believe taxing the transactions can slash the banking role as people will opt for cash payment. The exemptions worth Rs 120 billion given under different SROs in the realms of customs, sales tax and income tax are being withdrawn while the power of the Federal Board of Revenue to issue SROs will be taken back and the federal government will use this power in special circumstances. However, withdrawal of exemptions will bring a new wave of inflation and will affect the common man.
According to the finance minister, the target for GDP growth rate for the next fiscal year has been kept at 5.5 percent which will be enhanced to 7 percent by 2017-18. The minister also believes that inflation will be kept at a single digit, investment-to-GDP ratio will be increased to 21 percent, fiscal deficit will be contained at 3.5 percent and tax-to-GDP ratio will remain at 13 percent, strongly hopping that the foreign exchange reserves will be maintained at the minimum of $20 billion. As a matter of fact, a rationalised tax policy always remains in the best interest of the country in which businessmen have a free hand to do business. The overambitious targets serve no purpose as it happened in the case of increase in the transfer fees of vehicles in the last year’s budget. Increase in the transfer fee has caused a loss of Rs 4 billion to the national exchequer.
