ISLAMABAD - The PML-N government is all set to announce its second budget today (Tuesday) for the financial year 2014-2015 with total outlay of around Rs 3.9 trillion and deficit of 4.8 percent of the GDP.
Finance Minister Senator Ishaq Dar would announce the budget 2014-2015 in the National Assembly. Despite providing lesser relief for the common man, the government would introduce heavy taxation measures in the budget to meet the fiscal deficit target of 4.8 percent given by International Monetary Fund (IMF). Heavy taxation measures are likely to increase inflation in the country.
The Finance Ministry would present two options regarding increase in pay and pension at the cabinet meeting to be held with Prime Minister Nawaz Sharif in the chair a few hours before unveiling the budget. Under the first proposal, the Finance Ministry would suggest increasing the salaries by 10 percent 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 percent and 10 percent for BS-17 officers and above.
According to the main contours of the budget 2014-2015, the overall volume of the budget is over Rs 3.9 trillion. The 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 229 billion, Rs215 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 percent 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. Sales and federal excise measures 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 enhance federal excise duty on cement. It would also impose 10 percent withholding tax on foreign air tickets. Similarly, the government would enhance withholding tax rates from six to 10 percent 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. –IMRAN ALI KUNDI
Meanwhile, around Rs 17 billion would be generated through a new Federal Excise Duty (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. 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 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 percent in the upcoming budget 2014-2015.