ISLAMABAD - The PTI-led coalition government is all set to present second mini-budget in its just five-month tenure in the National Assembly today to boost stock market, agriculture and industrial sector besides imposing duties on luxury imports.
This would be the third money bill during the ongoing fiscal year. Earlier, the PML-N government had presented the annual budget for current fiscal year in April 2018 that was followed by a mini-budget in September 2018. Now, Finance Minister Asad Umar would present another mini-budget in the National Assembly today after getting approval from the cabinet that would be chaired by Prime Minister Imran Khan.
An incentive package for exporters and new investments would be announced through the ‘Finance Supplementary (Amendment) Bill, 2019.’ “Government of Pakistan is developing an investment promotion & industrial competitiveness package. Enhancing exports and supporting both domestic & foreign investors’ key elements of policy package to be announced on January 23, 2019,” said Khaqan Najeeb, spokesman of the Ministry of Finance.
However, sources said that the government is taking measures to increase the revenue to bridge the shortfall in tax collection that had surged to Rs158 billion in six months (July to December) of the current fiscal year.
About revenue measures, the government has planned to target luxury imports.
The government is likely to increase custom duty on the vehicles (1600cc and above) by 10 percent.
The government may also allow the non-taxpayers to purchase vehicles as the ban had adversely affected the revenue collection. This was one of the reasons behind massive shortfall of Rs158 billion in tax collection during the first six months of the ongoing fiscal year.
The government may also increase duties on the import of expensive mobile phones. An option of imposing Federal Excise Duty (FED) on usage of cellular phone is also under consideration through the upcoming mini-budget to increase tax collection.
The government is also contemplating to impose FED over the consumption of Rs500 load onto phone subscribers on a monthly basis. In other revenue generation measure, the government may reduce the minimum threshold of annual income tax slab down from Rs1.2 million to Rs0.8 million per year. The previous government had granted exemption of income ceiling up to Rs1.2 million from Rs400,000 per annum. The government had suffered a revenue shortfall of Rs25 billion by revising downward the minimum threshold of annual income tax slab during first six months (July to December) of the ongoing fiscal year.
The proposal of withdrawal of withholding tax on the banking transaction for filers is also under consideration.
On the other hand, the government would also present the Investment and Export Enhancement Package to boost the investment and business process in the country. Under the investment and export packages, the government would announce major reduction in cost of raw material for industrial sector. The government has decided to reduce and abolish the Regulatory Duty (RD) on 150 items recommended by the Ministry of Commerce. The government is waiving off RD on items related to industries including raw materials on electronics, engineering, chemicals and other sectors. It is proposed that the slab of 21 percent will be brought down to 20 percent, 16 percent to 15 percent, 11 percent to 10 percent and 6 percent to 5 percent through upcoming finance bill.
The equity markets have been demanding of the government to abolish advance tax on sale and purchase of shares. The rate of advance tax was doubled from 0.01pc to 0.02pc through Finance Act, 2016. The advance tax of 0.02pc is considered on the higher side by the PSX. This is being reversed to 0.01pc of the value of either purchase or sale of securities taking into account the fact that in day trading only one side commission is being charged by brokers.