The Pakistan government on Friday significantly raised subsidies and incentives for big business, manufacturing and agriculture sectors, while proposing around a 24 percent hike in revenues, in its fiscal budget for 2021-22
The Pakistan government on Friday significantly raised subsidies and incentives for big business, manufacturing and agriculture sectors, while proposing around a 24 percent hike in revenues, in its fiscal budget for 2021-22.
The budget, presented Friday by Finance Minister Shaukat Tarin, proposed Rs 506 billion worth of additional revenue measures.
“The stabilization phase is now over, and budget 2021-22 will focus on inclusive and sustainable growth…fostering growth with investment,” Tarin said in his budget speech marred by loud sloganeering by the opposition parties, Dawn reported.
The additional revenues are based on Rs 264 billion worth of policy measures and Rs 242billion of administrative.
The subsidies have been more than doubled (226 percent), and surcharges and levies on oil and gas were hiked. There was a 36 percent increase in petroleum levy.
Salaries will also go up by ten percent with the budget providing an ad hoc allowance and pensions at an additional cost of Rs 160 billion.
The budget massively relies on indirect taxes with Rs 115 billion additional revenue imposed on account of gas infrastructure development cess that would increase by a massive 767 percent to Rs 130 billion next year.
Petroleum prices are set to go up with the government targeting an additional revenue of Rs 160 billion from petroleum levy on oil projects.
The budget projects next year’s fiscal deficit at 6.3 percent of GDP (Rs3.42 trillion).
The revenue target for next year is targeted at Rs 5.829 trillion, compared to Rs 4.691 trillion this year, showing an overall increase of Rs 1.138 trillion (24 percent). About Rs 635 billion would accrue automatically on account of 8.2 percent inflation and 4.8 percent GDP growth rate.
The finance minister said the trickledown effect had not helped the vulnerable over the past 74 years and hence the government would change the course of history by uplifting 4-6 million low-income households in the next year, through a bottom-up approach. This would include Rs 500,000 interest-free business loan to every household, Rs 250,000 interest-free farming loan and Rs 200,000 interest-free loan for tractors and machinery and Rs 2 million worth of low-interest loan for house building.
The next year’s budget entails major concessions to the manufacturing sector, including automobile, textiles, pharmaceutical industry, mobile phone and information technology, and even small and medium enterprises (SMEs) through a reduction in import duties on raw material and lower general sales.
A major favor has also been given to the stock market through a reduction in capital gain tax from 15 percent to 12.5 percent, while a series of withholding taxes have been removed, including those on banking transactions, stock exchange transactions, margin financing, air-travel services, debit and credit card-based international transactions and mineral exploration.
The finance minister said the budget did not impose any new tax on the salaried class.
The minister also announced relief measures on setting up cold storage for agriculture products and tax exemptions on Covid-related medical equipment, etc, for another six months. He also promised a minimum wage of Rs 20,000 per month for private workers, an increase of 20 percent.