ISLAMABAD (APP) Government has recently introduced a new Rs120 billion tax regime through presidential ordinances with immediate effect for the remaining period of the current fiscal year (till June 30) to provide a cushion to the government help it restrict fiscal deficit to less than 5.5 per cent of GDP from the projected eight per cent or above. According to Minister for Finance and Economic Affairs, Dr. Abdul Hafeez Shaikh, the recent expenditures controls and revenue measures have been introduced to secure public finances as part of governments commitment to stabilise the economy and pursue our reforms agenda despite the shocks of unprecedented floods and rising oil prices. He said that Pakistans GDP growth was estimated to have been affected by 2 to 2.5 per cent because of floods and monetary term its damage was US $ 10 billion. The minister said that the additional taxes and expenditure reductions are expected to provide a cushion of Rs120b to the government and help it restrict fiscal deficit to less than 5.5 per cent of GDP from the projected eight per cent or above. He said that these expenditures control and revenue measures have been introduced to secure public finances as part of Peoples govt commitment to stabilize the economy and pursue our reforms agenda despite the shocks of unprecedented floods and rising oil prices. The Minister said that these measures would help the government in achieving the revised Rs1, 604 billion tax collection targets. So far, he said the FBR has collected Rs 873 billion in eight months, leaving it with a balance of Rs731 billion to be collected in the remaining four months of the financial year. Reragding the impacts of imposition of new taxes on common man, he explained that it is 'historic and collective failure of previous governments to mobilize domestic resources, which resulted in dependence on foreign loans and excessive borrowing from the State Bank of Pakistan and raised more risks to the economy like higher inflation. Regarding Revenue Measures, he said that the following additional revenue measures have been adopted to partially offset the increase in expenditure demands on account of floods, foregone revenues due to postponement of RGST and to remove inequities in the tax system: One-time surcharge of 15% on income tax payable for the remaining period of tax year 2010-11. Additional special excise duty (SED) of 1.5% on items already subjected to SED for the remaining period of tax year 2010-11. Withdrawal of exemption of sales tax on fertilizer, pesticides and tractors. The facility of zero-rating on plant, machinery and equipment including parts thereof has also been withdrawn. Zero-rating on five major export oriented sectors (textiles, carpets, leather, sporting goods and surgical goods) has been restricted to registered exporters and manufacturers-cum-exporters for export purpose only. A clear distortion visible in the assessable value of sugar by artificially limiting it to Rs. 28.88 per kg has been removed. The ex-factory price shall hitherto be the prescribed price for levy of sales tax on sugar. However, to protect the consumers, special rate of 8% for levy of sales tax on sugar has been retained. These measures would assist in achieving the revenue target of Rs. 1600 billion revenues during 2010-11, he added. Government, he said has brought down State Bank of Pakistan borrowings and would print less currency notes resultantly decrease in inflation. Minister for Finance Dr.Hafeez Shaikh said that when the present government came into power in 2008, the CPI based inflation was at 25 percent which has now been brought down to 12.9 percent. He said government is committed to stabilizing the economy and pursuing its reforms agenda despite the shocks of unprecedented floods and rising oil prices. Dr.Shaikh said that recourse to SBP borrowing has aggressively managed. He informed that the SBP borrowing stood at Rs.68 billion at end-February 2011 from a high of Rs.321 billion reached during the first half of current financial year. He said that Foreign Exchange Reserves has also crossed $ 17.5 billion highest in the history of the country. He said that Inflation rates have begun to decline for the last two months. During February 2011 the CPI was 12.9% significantly down from 15.7% recorded in December, 2010; He added that the external sector has shown extraordinary performance. Exports, he said have increased 26% in the last eight months. For February 2011, growth in exports was at historic 46%. He expressed the hope if this trend continues; the Exports are likely to cross $25 billion. The Finance Minister said that the remittances will surpass the $11 billion mark, which will also be historic. He added that more works remain to be done to ensure that these gains are consolidated and a solid foundation is laid for stability, growth in the economy and the prosperity of the citizens. The government, he said has decided to further control expenditures and to raise revenues to secure the public finances. He said that the following expenditure control measures for remaining part of the budget year will be effective immediately: * POL Entitlement, Purchase of Stationary and Travelling Allowance: The expenditures on these heads are cut by half. * Purchase of Durable Goods: There will complete ban on purchase of durable goods. * Ban on Fresh Recruitment: There will be ban on fresh recruitment unless process already initiated through proper advertisements. * Surrender of budgetary allocations beyond last years level: An exercise was undertaken successfully to secure surrender of excessive budgetary allocations over and above the last year. * Other savings: Numerous other small heads of account relating to grants to entities and bodies outside the government have been closely examined and savings effected. * Rationalization of PSDP: The PSDP has been rationalized while protecting projects in social sectors, less-developed areas and of strategic significance. The Finance Minister said that the combined impact of these measures will be Rs. 120 billion. He said that only obligatory foreign tours would be allowed and there would be no ban on foreign tours which involves no public exchequer of the country and all the expanses would be born by the inviting country or the organization. Under the NFC award the provinces have transferred additional Rs.300 billion to Rs.400 billion. This he said would help provinces to provide basic facilities and amenities including better health, education and clean drinking water to the people in their respective provinces.