Budget 2016-17: Govt eyes big rise in tax revenues

ISLAMABAD: Government is targeting a 16 percent rise in tax revenues in the year ending June 2017, Finance Minister Ishaq Dar said on Friday as he unveiled a budget.

In his budget speech in the parliament, he said Pakistan would target a fiscal deficit of 3.8 percent of gross domestic product for the coming financial year, down from the 4.3 percent envisaged for this year.

He said the aim was to push Pakistan´s persistently low tax-to-GDP ratio to above 10 percent and raise revenues from taxation to 3.95 trillion rupees ($37.8 billion)from 3.42 trillion this year.

The minister presented a review of government’s performance over the last three years during which he said the country achieved economic stability.

“Economic indicators reflect our performance,” Dar said. “I am thankful to Allah that we are given an opportunity to present budget for fourth time. Our each budget was better than the previous ones.”

“We have successfully managed to put Pakistan on the right track.” The finance minister told the House that the country’s GDP growth stood at 4.7 pc. “While on the path to economic prosperity, the government has managed to put inflation in check,” he added.

Revealing his government’s performance on the economic front, Dar said tax collection stood at record high. However, exports showed a major decline, but for the finance minister, it was mainly due to a global downward trend that should be blamed.

He said pension of federal government employees would be increased by 10 percent while employees over 85 years of age would get 25 percent raise.

The minister also announced 50 percent increase in conveyance allowance for grade 1-5 employees.He expressed hope to meet Rs3104bn tax revenue target.

He said exports stood at 18.2 billion dollars with 11 percent decrease between july-2015-2016 as compared to 20.5 billion dollars in the same period in 2012-13 , mainly due to Decline in Global Comodities Prices.

The minister said imports stood at 32.7 billions dollars between July-April 2015-16 as compared to  33 billion dollars in the same period in 2012-13.

A 40 percent increase was recorded in imports of machinery which shows an increase in investment.

Appreciating services of Pakistani expatriats, he said Pakistan’s foreign remittances soared to 16 billion dollars during July-April 2015-16 as compared to 11.6 billion dollars during the same period in 2012-13.

GROWTH

• GDP growth seen at 5.7 percent year-on-year in 2016/17

REVENUE

• Aims to push tax to GDP ratio over 10 percent in 2016/17
• Tax revenues estimated at 3.96 trillion rupees versus 3.42
  trillion rupees in prior year
• Total revenue estimated at 4.92 trillion rupees in 2016/17
• Revenue from privatisation budgeted at 50 billion rupees in
  2016/17

SUBSIDIES

• Proposes tax breaks for five sectors : leather, surgical
  goods, carpets, textile and sports
• Proposes extra subsidies for inputs in farm sector including
  fertiliser, urea

DEFENCE BUDGET

• Defence budget for 2016/17 set at 860 billion rupees, up 11
  pct y/y

TAXATION

• To renew "Super Tax" on corporations reporting more than 500
  million rupees in pre-tax profit

• Sets development budget at 800 billion rupees in 2016/17, up
  100 billion rupees from last year