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June 13, 2020

‘No new taxes’ in PTI’s Rs7.1tr ‘corona’ budget

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June 13, 2020

By News Desk

ISLAMABAD: The federal government has presented a 7.14-trillion-rupee budget that has “no new taxes” for FY 2020-21 as the Pakistan Tehreek-e-Insaf (PTI) seeks to address the coronavirus pandemic’s economic fallout that resulted in the contraction of Pakistan’s GDP growth.

“No new taxes have been introduced in the budget for the upcoming fiscal year, which will not only provide relief to the common people but also boost economic activities across the country,” federal Minister for Industries and Production Hammad Azhar said while presenting the budget in the National Assembly on Thursday.

This is the second federal budget for the year 2020-21, with a total outlay of Rs7.137 trillion focusing on facilitating businesses, relief to the vulnerable segments of society, fiscal consolidation, revenue mobilisation and austerity measures.

Even though the National Assembly session was at a fourth of its strength due to virus precautions, the minister’s speech was marred by opposition protests, who chanted loudly against the government and Prime Minister Imran Khan, who was present in the session.

As Azhar briskly went through the salient features of the budget, the Premier looked on, fervently going through his prayer beads. Several times, Speaker Asad Qaiser interrupted to call for calm, which made the opposition respond in louder chants.

In his speech, the minister highlighted the importance of “striking a balance” between mitigating the coronavirus effects and continuation of economic activities to keep the wheels of the economy turning.

He also underlined the importance of fixing the primary balance at an appropriate level, stressing the need for the continuation of the Ehsaas Programme to help the vulnerable segments of society. “The government will continue providing relief to the corona-hit people during the upcoming fiscal year,” Azhar said.

The minister said the government wanted to continue the Extended Fund Facility (EFF) programme with the International Monetary Fund (IMF).

He also said the development budget would be maintained at an appropriate level to help achieve GDP growth while prioritising defence and internal security.

The minister said during the fiscal year 2020-21, the government has set the revenue collection target at Rs6,573 billion (6.57 trillion) — Rs4,963 billion (4.96 trillion) in tax revenues and Rs1,610 billion (1.61 trillion) in non-tax revenues.

Azhar said against the total Rs7.137 trillion in federal expenditures, the budget deficit is estimated at Rs3.437 trillion during the fiscal year 2020-21, which will be 7 per cent of the GDP, while the primary balance will remain at 0.5 per cent.

Inflation, the minister said, would be brought down to 6.5 per cent from the current 9.5 per cent. The development expenditure outside PSDP has been estimated at Rs70 billion in the budget 2020-21. The size of Public Sector Development Programme (PSDP) for 2020-21 is Rs1,324 billion (1.3 trillion). Out of this, Rs676 billion has been allocated to provinces.

Federal PSDP has been estimated at Rs650 billion out of which Rs418.7 billion for federal ministries/ divisions, Rs100.4 billion for Corporations, Rs3 billion for Earthquake Reconstruction and Rehabilitation Authority (ERRA), and Rs7 billion for Covid-19 responsive and other Natural Calamities Program.

The minister said the provision of relief to the vulnerable and deserving segments of society remained the government’s priority. To that end, funds for Ehsaas Programme have been increased from Rs187 billion last year to Rs208 billion for the current year.

Likewise, he said, the government has set aside Rs179 billion for the provision of subsidies on energy, food and others to ensure relief is given to low income people. “The targeted subsidy will be provided to the deserving segment of society,” he added.

He also announced that a computerised national ID card requirement on purchases above Rs50,000 in FY2019-20 has now been increased to Rs100,000.

The minister said the government also intended to review the National Finance Commission (NFC) and fulfil its commitments that were made at the merger of erstwhile Fata (Federally Administered Tribal Areas) areas in the Khyber Pakhtunkhwa (KP) province. He said effective measures had also been taken to enhance remittances, improve railway infrastructure, promote e-governance, and provide funds for the welfare of artists.

The minister said the allocations for Higher Education Commission (HEC) had also been increased from Rs59 billion to Rs64 billion, while the government allocated Rs55 billion for Azad Jammu and Kashmir, Rs32 billion for Gilgit-Baltistan, and Rs56 billion for the merged districts of KP. In addition, the Sindh and Balochistan provinces would be given Rs19 billion and Rs10 billion respectively.

He said the government would try to enhance revenue collection without any change in the existing taxes. For providing relief to the construction industry, he said, the government would provide resources for the Naya Pakistan Housing Project.

The minister said the special programmes launched at the directives of Prime Minister Khan, including Kamyab Jawan Programme, Sehat Card and Billion Tree Tsunami Programme would continue while the government would take austerity measures and reduce its expenditures.