Industry, poor to get relief: No new tax in coming budget, says Hafeez Shaikh

ISLAMABAD: Adviser to Prime Minister on Finance and Revenues Dr Abdul Hafeez Shaikh has said that the government would impose no new tax in the coming budget for 2020-21.

In an exclusive interview with Geo News during its show ‘Aaj Shahzeb Khanzada Kay Sath’ on Monday night, Dr Abdul Hafeez Shaikh said that the government would bring down duty at zero level on many more items in the coming budget in order to give boost to industries. He said that the government would have to devise smart budgeting in order to create cushion for stimulating the stagnating economy. He said that the government would take decision about hedging of oil prices in international in next two to four weeks as the ECC would take up decision in the context of analysing its price and attached cost of insurance to get life time opportunity to get benefits out of it.

He said that the government would arrange additional external financing of around $4 billion as the IMF already provided $1.4 billion to Pakistan and other lenders such as the World Bank and Asian Development Bank would provide financing to Pakistan to combat with novel coronavirus. He said that Islamabad expected good news on account of deferred payment facility from G20 countries on account of $1.8 billion.

He said that the current account deficit which climbed to $20 billion had now been brought down to $3 billion. He said that the country could not boost up exports in last 70 years, but the imports were reduced in order to improve the current account deficit.

He said that the exports and remittances were going to affect negatively in post-COVID-19 pandemic. He said that the government did not approve single supplementary budget of any ministry/ division and in first three quarters (July-March) and the period primary deficit was kept under control. He said that the efforts would be made to curtail the budget deficit below nine percent of GDP for the outgoing fiscal year.

He said that the reduction in discount rate by 1 percent would help the government to save Rs100 billion. He said that the government utilised almost Rs5,000 billion for debt servicing in last two years as Rs2,200 billion were utilised in 2018-19 and another Rs2,700 billion were spent on payment of loans in the outgoing fiscal year.

Talking about next budget, he said that the next budget would provide relief to industries and people of Pakistan. He said that the government had provided relief to poorest of the poor and laid off workers and it intended to utilise Rs144 billion during the current fiscal year. He said that so far Rs90 billion were provided to people through Ehsaas programme.

The customs duties, he said, would be reduced and more items would be brought at zero slab in the next budget. He said that this ongoing crisis provided an opportunity on account of reduced oil prices in international market. He said that the ECC would consider with hedging of certain portion of oil keeping in view overall benefits out of it in order to get life time opportunity. He said that the country did not have more capacity of storage, so the hedging would be considered in next two to four weeks’ period.

To a query regarding illicit cigarettes shares when the withholding tax was brought down to Rs10 per kg on tobacco production, Dr Hafeez Shaikh replied that the prime minister had issued instruction to take stern action against illegal cigarettes, so efforts would be made to bring informal sector into tax net.