ISLAMABAD - The PTI’s government yesterday presented third finance bill for current fiscal year in National Assembly, dubbing it as an economic reforms package which was needed to fix the economy.

Presented by Finance Minister Asad Umar amid heavy sloganeering by opposition, the Finance Supplementary (Second Amendment) Bill, 2019 is primarily a package of tax measures that are meant for providing concessions to certain sectors of economy and increase ease of doing business.

The mini budget carries encouraging tax measure for small and medium enterprises, agriculture, housing, print media industry and stock market.

The minister in his speech said the corrective measures were necessitated primarily because the PML-N government had delivered an “election budget” which was also highly unrealistic in terms of revenue and growth targets.

Secondly, he said, it was part of government’s efforts to remove the structural flaws in the economy which force the country to go for IMF loans again and again.

Under the new finance bill the 49 percent tax on small and medium enterprises has been reduced to 20pc, while interest on agri loans has also reduced from 49pc to 29pc.

The government proposed introduction of interest-free revolving credit of Rs5 billion (qarz-i-husna), waiving off withholding tax on bank transactions for tax filers.

Ban on purchase of vehicles for non-filers has been lifted for new locally manufactured cars up till 1300CC capacity, but higher taxes will apply.

Import duties on cars with engine capacity of 1800CC and above has been increased. Taxes and duties on budget mobile phones have been reduced, on high-end sets increased.

Gas Infrastructure Development Cess has been removed from fertiliser production. Duty on diesel engines for agricultural applications will be reduced to 5pc from current 17pc.

Machinery for greenfield projects (including renewables) has been exempted of customs duty, sales tax and income tax (for five years).

Duties on raw materials have been reduced and abolished in some cases to support export industries. Super tax on non-banking companies will be abolished from July 1, 2019.

Small businesses exempted from submitting withholding tax returns every month can now do so twice every year. A pilot scheme will be introduced in Islamabad to facilitate traders in filing and paying taxes.

Tax on income generated from loans to small businesses, agriculture sector and low-income housing would be reduced from 39pc at present to 20pc.

The 1pc per annum reduction in corporate income tax will be continued. Capital loss carry-over will be allowed for 3 years (in stock trading), while 0.02 percent withholding tax on trading has been abolished.

Duty on newsprint abolished completely and the Rs20,000 fixed tax on marriage halls has been reduced to Rs5,000. Investment in solar panels and wind turbines will be exempt from duties and taxation for five years.

Assembly scene

The finance bill presented on Wednesday was 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.

The joint opposition kept on shouting anti-government slogans including ‘mini-budget Na-manzor’ [unacceptable], ‘Jhota [Liar], ‘Go-Niazi Go’, during the speech of finance minister Asad Umar.

The opposition lawmakers mainly from PML-N made noise by thumping desks with the copies of mini-budget to interrupt the minister. Some of them including PML-N’s Marriyum Aurangzeb tore copies of mini-budget and threw in the air.

It was difficult to easily hear mini-budget presented by the minister as treasury lawmakers including prime minister used headphones to listen the speech.

Some of the opposition members from backbenches were also trying to apparently gather around the speaker’s podium but they were stopped by PPP-P’s senior members including Khursheed Shah.

Prime Minister Imran Khan was seen smiling most of time during the speeches.

Asad’s speech

The finance minister in his speech said that government is presenting the economic reforms package to fix the economy, which could not be declared as ‘mini budget’.

“We hope this will be last IMF package that the country will have to take,” he said and added that Pakistan’s economy would see the most prosperity in its history during the current government’s tenure, as the GDP growth would be higher and current account deficit would be lower during fiscal year 2022-23.

Umar announced to reduce the combined taxes including income tax and super tax to 20 percent from existing 39 percent on small and medium-sized businesses (SMEs). He termed the SMEs as the backbone of the economy.

Announcing reduction in the interest rate for agricultural loans from 39 percent to 20 percent, he said, “The agriculture loans have already recorded 22 percent growth during the six months of the current fiscal year.”

The finance minister also announced to reduce income tax on housing schemes for low income people from 39 percent to 20 percent to encourage housing sector. He said that government had already announced to construct 5 million houses in the country under prime minister’s project.

The minister also announced to establish revolving fund of Rs5 billion for interest free loans to provide low-income housing.

Asad said that government has decided to introduce pilot scheme in Islamabad to facilitate traders in filing and paying taxes, which would be implemented in other cities following its success in federal capital.

He also announced to abolish import duty on newsprint in order to facilitate the media industry. To promote ease of doing business, Umar said that the business community will now be required to file their statements about withholding tax only twice in a year from the previous practice of filling twelve statements in a year.

In the next five years, those working to manufacture renewable energy products will be exempt from sales tax and customs duty. Investment in solar panels, wind turbines exempt from duties and taxation for five years.

He also announced to continue the one percent reduction in corporate income tax per annum. In stock exchange market, he said that government has abolished advance tax on sale and purchase of share, as the equity markets have been demanding.

Finance Minister said that government has resolved the exporters tax refunds, which had surged to Rs200 billion. A scheme would be introduced of promissory notes for exporters. Any exporter will be able to take loans from banks on these notes, he added. He also announced to reduce the duty on diesel engines for agricultural purposes to five percent.

Umar said that government has decided that there would be no ‘Gas Infrastructure Development Cess’ on fertiliser production, which would reduce the fertilizer prices by Rs200 per bag. He also announced to withdraw super tax on non-banking companies from July 1 2019.

 

Govt rolls out economic

‘reforms package’