PTI’s ‘Naya Pakistan’ invisible in KP budget: Pervaiz

ISLAMABAD: Pakistan Tehreek-i-Insaaf’s (PTI) ‘Naya Pakistan’ is invisible in the budget in their domain as it does not reflect their proclaimed vision, Minister for Information and Broadcasting and National Heritage Senator Pervaiz Rashid has said.

In a statement on Sunday, he said that the figures had been tampered with and fudged to cover a Rs41 billion shortfall in the budget to make it appear as a balanced budget.The minister said that 71 percent of the total budget would be spent on salaries, leaving merely 29 percent for development that was very little for development in the province.

The PTI should have curtailed its administrative and non-development expenditure to spend the money on the welfare of the common people, Senator Pervaiz Rashid suggested. He said that another contradiction of the PTI appeared by accepting foreign aid from USAID, Britain and Germany against their claims of not going to the United States and their actions of staging protests and road blockades against US/Nato.

“It is not a tax-free budget as tax has been imposed on professionals and other categories,” he added.“So where is the relief for the common man? For the first time in the history of Pakistan, property tax has been extended to the rural areas and villages in this budget of KP,” he said.

“Is this the ‘Naya Pakistan’ vision of the PTI leadership?” The minister questioned.He said that KP had spent only 50 percent of its current budget and the remaining amount was re-appropriated in June in the last month of the financial year to the district of KP chief minister, Nowshera, the district of the Speaker, Swabi, and the district of the finance minister, Dir, which was against the slogans of fairness and transparency of the PTI.

Senator Pervaiz Rashid said that the PTI criticised the PML-N for the Metro Bus Project, terming the Rs40 billion project a ‘Jangla Bus’, but the KP government was planning to spend Rs230 billion on it for a small city like Peshawar. “Is it not a mega scandal in the making?” He asked.

“Where are the claims of Imran Khan to turn every hospital in KP into Shaukat Khanam? Why has the Chamber of Commerce in Peshawar placed on its building a huge banner stating, Save Peshawar? Why are traders, industrialists, doctors and others leaving Peshawar?”

The senator asked many questions from the PTI: why have the salaries of the chief minister, cabinet ministers and others been doubled with 100 percent increase including house rent which was Rs70,000 as compared to the salaries of the government employees which had been increased only by 10 percent?

Why did the PTI government waste most of the financial year as the first development project was initiated in February 2014? “A token amount of Rs200 million had been earmarked for the Urban Transport System, what happened to the Nano Train of Imran Khan? I hope Imran Khan will come up with answers of these questions in his next public gathering,” Parvaiz Rashid said.

Rs404 bn KP budget presented

 

PESHAWAR: The Khyber Pakhtunkhwa (KP) government on Saturday presented a Rs404.8 billion budget for the financial year 2014-15 earmarking Rs80 billion for education and increasing salaries and pensions.
The budget proposed a levy of 5 percent to 17.5 percent slabs of agriculture income tax and increase in provincial taxes, fees and royalties.

Senior Minister Sirajul Haq, who also holds the portfolio of Finance, while presenting the budget in the provincial assembly, said the development outlay of Rs139.8 billion for the next fiscal reflected an 18 percent increase over the current financial year.

The finance minister said the government was happy to announce that no new tax had been imposed in the budget 2014-15 on low-income people.

However, the finance bill presented with the budget reflected an upward revision in taxes on services, land, movable and immovable properties, guest houses, restaurants, petrol and CNG filling stations, cell phone companies’ towers and services.

The provincial government will collect agricultural income tax at the rate of 5 percent from every owner of agriculture land where total taxable amount exceeds Rs400,000.

Where total taxable income exceeds Rs550,000, but does not exceed Rs750,000, land owners will pay Rs7,500 plus 10 percent on an amount exceeding Rs550,000 and the owner whose taxable income exceeds Rs750,000, but does not exceed Rs950,000 will have to pay Rs22,500 plus 10 percent agriculture income on the exceeding amount.

Similarly, the total taxable income exceeding Rs950,000, but that does not exceed Rs1,100,000 will be taxed Rs42,500 plus 15 percent on agriculture income on the exceeding amount.

According to the finance bill, a land owner whose taxable income exceeds the amount of Rs1,100,000 will pay Rs6,500 plus 17.5 percent on the exceeding amount.

Announcing the upward revision in various taxes, Siraj said that increase in provincial revenue was inevitable due to which the increase in the ratio of existing taxes has been proposed.

He said an increase in the capital value tax on the transaction of urban immovable property (UIP) was proposed because the ratio in the current budget was fairly low.

According to the finance bill, immovable properties have been divided into 12 categories wherein the tax rate for areas in the provincial metropolis as notified by the government in category A up to 5 marlas (other than self-occupied) has been determined at Rs1,000 per annum, in B-Rs 900 and C (townships) Rs750, exceeding 5 marlas will pay Rs1,700 in A, Rs1,600 in B and Rs1,500 in category C, while 10 marlas’ owner will pay Rs2,200 in category A, Rs2,100 in B and Rs2,000 in C category.

The owners of 15 marlas will pay Rs3,300 in A, Rs3,200 in B and Rs3,000 in category C, while those of the 18 to 20 marlas houses and flats will be taxed at the rate of Rs10,000 in category A, Rs9,000 in B, Rs8,000 in category C. Similarly other eight categories have different tax slabs for the immovable properties.

The budget outlay, showing a 18 percent increase over the last budgetary allocations, also proposed a 10 percent increase in the salaries of employees in line with the federal government decision, and 20 percent increase in the medical allowance of grade-1 to 15 and 5 percent in their conveyance allowance, while a premature increment to grade 1 to 4 employees has also been proposed in the budgetary allocations.

Also, in line with the federal government decision, the minimum wage for labourers has also been proposed at Rs12,000.

Sirajul Haq said the provincial government was working out the modalities of Rs6 billion pro-poor initiative under which the poor will get a subsidy on food items. He said under the package, the deserving will get a monthly Rs10 subsidy on per kg flour and Rs40 for per kg ghee and four million people will benefit from the scheme.

He said like the previous year, the 2014-15 budget had also been segregated into three parts, welfare, administration and development with the main focus on its welfare portion for which a sum of Rs219.69 billion, that is 54.27 percent of the total budget, while Rs45.30 billion had been set aside for administration, that is 11.19 percent of total budget, showing an increase of 16.08 percent over the current budget.

The minister said Rs139.8 had been allocated for the development portion which is 34.54 percent of the total budget outlay reflecting an increase of 18.48 percent over the development allocations for the current fiscal. The provincial government would prioritise the ongoing projects to decrease the liability of throw-forward.

The upbeat finance minister, and Amir the Jamaat-e-Islam (JI), a coalition partner of the Pakistan Tehreek-e-Insaf (PTI) in the province, hinted at initiating good governance and the elimination of corruption in the province.

He termed the budget balanced, as both the expenditures and revenue receipts in the financial year 2013-14 have been estimated at Rs404.8 billion apiece.

The minister said general revenue receipts for the next fiscal year included Rs227.12 billion under the federal tax assignment which was 14.55 percent higher than the current fiscal.

He said Rs12 billion receipts are expected as net profit on hydel power generation along with the expected receipt of Rs32.27 billion as arrears of net hydel profit, Rs29.26 billion as straight transfers as royalty on oil and gas produced in the southern districts that is 6.4 percent higher than the current year.

Rs27.29 billion special grants for the war on terror that is also 14.55 percent higher than the current year’s war subvention is also expected to be received during the next fiscal, Siraj said.

He said the province expected to receive in its own receipts of Rs12 billion as GST on services showing an increase of 100 percent, Rs2.85 billion as profit from the hydel power generation projects in the province and Rs35.35 billion as foreign project assistance, besides Rs727 million from other resources.

The minister said the budget carried expenditure of Rs404.8 billion in which Rs265 billion had been allocated for current expenditure; while other expenditure recording an increase of 17.26 percent include Rs25.2 billion for health, Rs80.72 billion for education, Rs28.53 billion for police, Rs30 billion for payment of pensions, Rs13.9 billion for payment of mark-up on loans, Rs3.20 billion for irrigation sector, Rs2.17 billion for technical education and training and Rs5.26 billion for works and communication.

The environment sector will get Rs1.65 billion, agriculture Rs3.14 billion, while Rs2.500 billion was set aside as food subsidy for wheat procurement and Rs1.11 billion will be spent on social welfare and women’s development sector showing an increase of 20 percent, Siraj said.

KP cabinet approves 2014-15 budget proposals

PESHAWAR: The Khyber Pakhtunkhwa cabinet has approved 2014-15 budget proposals.

The budget will be presented during the provincial assembly session scheduled for 4:00 PM today (Sunday). The budget which is in excess of Rs400 billion will be presented by senior provincial minister and JI leader Siarjul Haq.

Rs139.70 billion has been allocated for annual development programme which includes Rs39.65 billion from the foreign development fund.

The budget allocation for education and health has also been increased in this year’s budget. Over Rs24.63 billion have been allocated for health while Rs79.92 billion have been allocated for education.

The provincial budget also includes the following projects: Peshawar mass transit, mobile hospitals, schools, highways, roads and bridges.

It is expected that the budget will also include a 15% pay raise for government employees.

Qaim Ali Shah presents Rs686 billion outlay Sindh budget

KARACHI: Sindh Chief Minister Qaim Ali Shah on Friday presented budget proposals for the fiscal year 2014-15. During his budget speech in the Sindh Assembly, he said that outlay of the budget would be Rs686 billion.

The Sindh government has announced 40,000 job opportunities in financial year 2014-15. Shah said that Pakistan Peoples Party government had created 200,000 jobs in last 6 years.

He said that in the new budget more jobs would be created for poor and jobless citizens of the province as it is the priority of PPP to provide maximum number of jobs to people.

The chief minister said that Sindh didn't get its share of royality on account of gas infrastructure. He said that salaries of the Sindh government employees had been increased by 10 percent in the budget.

He said 168 billion rupees have been proposed for the development projects of the province in the budget. Shah said that Rs42 had been allocated for the development budget of Karachi.

Sindh cabinet approves 2014-15 budget proposals

KARACHI: The Sindh cabinet has approved the provincial budget proposals for fiscal year 2014-15.

The provincial cabinet meeting was chaired by Chief Minister Qaim Ali Shah.

The provincial budget has allocated 30 per cent for education. Sindh Education Minister Nisar Khuro said 4,000 students of class 4-10 will be provided a stipend of Rs2500-Rs3500.

Opposition dubs budget removed from reality

 

ISLAMABAD: Opposition parties Tuesday rejected the new budget as anti-people and alleged it was aimed at promotion and protection of the capitalists and businessmen interests.
Leader of Opposition in the National Assembly Syed Khursheed Shah in his reaction alleged that the budget carried no good news for the masses, big figures were shown but the fact was that the federal government has miserably failed to achieve its own targets.

“Finance minister’s speech was based on unrealistic figures and had no connection with ground realities of Pakistan. The government claims to have controlled the inflation whereas prices of onions, tomatoes, potatoes, atta and other commodities are at all time high. Even bananas today are touching Rs200 a dozen,” he noted.

Expressing deep concern over the current situation, Shah said that the security issues were threatening the nation while people continued to live in darkness because of long hours of load-shedding.

Finance Minister Dar mentioned austerity measures in his speech but he forgot that Prime Minister Nawaz Sharif had 14 official foreign visits to his credit in the first year of his government, he noted. “Austerity begins at home so the government needs to cut its own expenses and provide immediate relief to people,” he said.

The 10 percent ad hoc salary increase, he said, also sounded like a joke when everything was so expensive, adding salary increase should be in balance with ground realities and government seemed to be insensitive about it.

He said that the government had totally failed to meet its own budget targets and was now again setting higher targets which they would never meet. Shah said that it was sad to see that an amount of only Rs10 million was kept for Lyari Expressway while the Karachi Circular Railway also given an insufficient allocation of only Rs250 million.

“PPP believes in equitable distribution of resources and wealth and all cities of Pakistan should be treated equally in terms of development”, Shah said.Other opposition leaders termed the budget speech of Finance Minister Muhammad Ishaq Dar as a jugglery of words and statistics and claimed there was nothing in it for the common man.

They contended that linking of GST to electricity bills of big plaza and shopping centres would ultimately be a burden on the consumers, as it would be shifted to them by enhancing prices of goods.

Withdrawal of exemptions on some dairy items, they pointed out, would also be affecting the common man and the increase in tax on compressed natural gas (CNG), mostly used by the lower and middle segments of the society, would also increase its price by at least Rs3 per kilo.

The Jamaat-e-Islami (JI) Ameer Sirajul Haq called the budget as anti-people and alleged the government intended to provide no relief to 95 percent of the total population. “In no way, it is a revolutionary budget and just a traditional budget which serves interests of the 5 per cent elite class,” Sirajul Haq in his immediate reaction to the federal budget, said.

The JI Ameer also regretted a meager 10 percent rise in salaries of the government employees and 10 per cent raise in pensions of retired persons.Siraj also lamented imposition of tax on retailers and dairy product and increase in taxes on the CNG sector. “Such taxation will directly affect the common man,” he said.

Deputy Speaker of the Sindh Assembly, Shehla Raza, who belongs to PPP, in her reaction to the budget, said that the budget was for the interests of industrialists and capitalists. She pointed out already the prices of common kitchen items like pulses and vegetables were sky-rocketing.

Pakistan Tehreek-e-Insaf MNA Ayesha Gulalai also came hard on the government for presenting a budget that offered no real relief to the masses. She pointed out if the rulers were sincere in giving some relief to the common man, the GST should have been slashed.

The cut in revenue, she contended, could have been made up or even much more would have been pocketed by focusing on 4 million potential persons, who must be brought in the tax net.The legislator from Khyber Pakhtunkhwa reiterated that the masses’ money stashed in foreign banks should be brought back to give a push to the national economy.

She contended there was a mechanism to find out whether or not the massive amounts kept in off-shore banks was legitimately earned or otherwise. “Politicians’ reluctance to bring back it to Pakistan clearly indicates they are not ready for audit of it,” she maintained.

Talking to media persons outside the Parliament House, Awami Muslim League President Sh Rashid Ahmad rejected the budget and charged that the government failed to achieve even a single economic target during the out-going financial year.

Independent MNA Jamshaid Dasti also did not appear happy with regards to the budget and alleged that instead of offering relief and breathing space to labourers, capitalists had been given further protection in the budget.

Our correspondent add from Lahore: Awami Workers Party (AWP) has termed the federal budget 2014-15 as a document favouring the corporate sector of the country and carrying very little for the poor.

In a statement issued Tuesday, AWP Secretary General Farooq Tariq stated that human development had almost been ignored and major preference had been given to the infrastructure. He said Rs113 billion had been allocated for construction of roads but for the health sector, an amount of Rs26 billion, quite lesser, had been allocated.

Rejecting only 10 percent raise in the salary of the government employees, Farooq Tariq said at least 50 percent increase should be announced in this regard. He demanded that minimum wage of labourers should be Rs20,000 per month. The AWP leader demanded more allocation for health and education.

Jamaat-e-Islami (JI) ameer Sirajul Haq termed federal budget as anti people and scripted by IMF, with privileges for the elite class and deprivations for the 95 percent of the masses.

Far from being a revolutionary budget, this is yet another traditional jumble of words that aims at giving false hope to the masses, Sirajul Haq said, adding the rulers believed that masses were speechless and won’t react to the budget. However, he said, it would have been better if the government had announced a pro-poor budget.

JI chief said electricity was the basic requirement of masses and budget proposed an advance tax on every household, which was sheer injustice.

JI Secretary General Liaqat Baloch described federal budget as highly disappointing, especially for the poor workers, womenfolk and pensioners. JUP president Pir Ijaz Hashmi said the budget is a jugglery of words prepared by elite businessmen to plunder the basic needs of the poor. He termed the budget as “anti-poor” which contain heavy privileges for the affluent class while giving nothing to the poor.

JUI-S secretary general Maulan Abdul Rauf Farooqi said those working to please the IMF and World Bank were simply unable to prepare a poor-friendly budget, and any budget from them has to be anti-poor.

Agencies add: All Pakistan CNG Association (APCNGA) has rejected additional taxes imposed on the CNG sector in the budget 2014-15.Additional taxes and double taxation will destroy the limping CNG sector, said Pervaiz Khan Khattak, central chairman APCNGA.

In a statement, he said that government has been collecting over 26 percent sales tax from CNG outlets illegally as the Supreme Court has directed collection of 17 percent sales tax. He said government has been collecting double taxes which will have an impact of Rs3 per kg which will be impossible for CNG owners to absorb. In this scenario an upward revision in the price of CNG has become imperative, said Khattak.

He rejected efforts to provide cover to illegal sales and income taxes in the budget. Pervaiz Khattak said that why prices have been increased when the commodity is not available for the masses.

Price hike can be justified if supply of natural gas is increased to the CNG outlets. National textile industry has outrightly rejected government’s decision of any further increase in gas, electricity tariff, warning that implementation of such would bring country’s industry to edge of virtual destruction.

The chairman All-Pakistan Textile Mills Association (Aptma) expressed his strong concerns at the way the largest and shining export industry of Pakistan was suffering due to accursed load shedding; especially more than 10-hours of load shedding in industrial sectors of Punjab and northern areas, forcing these hapless victims to resort to more expensive alternate means of energy, which raised production costs.

He also pointed out that textile industry provided 38% of nation’s employment, which was in danger of suffocation due to this tariff increase of electricity.

PML-Q Punjab has termed the federal budget as one of the biggest fraud with the masses and has announced a protest against it.

Commenting on the budget 2014-15, PML-Q leader Muhammad Basharat Raja said the government of has failed to save the interest of poor. AML head Sheikh Rashid Ahmad has termed the 2014 budget as an IMF-oriented ‘Dar Budget’.

Talking to media outside Parliament House on Tuesday, he berated the budget’s failure to provide for the common man, saying that Ishaq Dar had no talent except that of filling a pile of paperwork. He also expressed his displeasure at the failure of government to provide Altaf Hussain with passport, due to which he thought Hussain was arrested in London.

A traditional budget at best

 

ISLAMABAD: What we are up against are extraordinary economic challenges. A traditional budget is not good enough. What we need is a budget with a whole host of ‘out of the box’ features. What we have is a ‘standard, conventional, customary budget produced, done, or used in accordance with our long-established rather mundane traditions’. Being traditional does not mean being bad.
Here’s what is good: The budget deficit, certainly the root of a hundred financial evils, is down. Down rather substantially-around 2 percent of GDP or a wholesome Rs500 billion. That means that the government would not have to borrow Rs500 billion and that means that the private sector would have Rs500 billion to invest. I hear that the Peoples’ Work Program I and the Peoples’ Work Program II, under which MNAs and Senators dole out billion-rupee programs, are on their way out. That is so good.

I like the tobacco tax and I wish it was a lot higher because we need to discourage some 25 million Pakistanis from taking out their next cigarette and cigarette kills more than 100,000 Pakistanis a year. I also like the beginning of the elimination of the SRO regime.

I like all the housing incentives wishing that the budgetary allocations were a lot higher. And I like the Rs63 billion for the Higher Education Commission.I also like how Ishaq Dar has reversed the trend whereby even Pakistani housewives had begun converting their rupees into dollars.

And I like how 3G/4G licences were auctioned off in a transparent exercise.What I didn’t like is tax, tax and more tax. There was hardly anything about expenditure control. The oil mafia continues to gulp down Rs400 billion a year. The State Owned Enterprises eat up an additional Rs500 billion. The Rs1.3 trillion PSDP has little monitoring and no direction. And our government’s so-called Commodity Operations cost us Rs100 billion a year every year.

What is totally beyond my comprehension is how the Ministry of Finance plans on collecting an additional Rs600 billion in taxes. What I do not understand is that how can the government expect to extract an additional Rs600 billion in taxes and still claim that our GDP growth will come in even higher. Oxymoron!

What I don’t like is the way the FBR collects taxes. Our industrial sector is 25 percent of our GDP and we extract 67 percent of taxes from the industry. Our agriculture sector is 21 percent of our GDP and we collect Rs1 billion in taxes. Our services sector is 55 percent of our GDP and no one knows how much is collected in the form of taxes.

What I miss the most is a growth strategy. The budget really does not have a growth strategy. The budget has failed to identify particular growth sectors. And the budget has failed to identify specific growth drivers.

Yes, the budget has mega infrastructure projects as growth drivers. That experiment is bound to fail — fail rather miserably. In 1930, America tried to come out of its depression via government spending on infrastructure. Eighty four years ago, America failed. In 1990, Japan tried to come of its recession via government spending on infrastructure. Twenty four years ago, Japan failed. Eighty five years ago, Einstein defined insanity as: “Doing the same thing over and over again and expecting different results.”

We will not be able to accelerate our rate of economic growth by starting multi billion rupee infrastructure projects. Economic growth is a byproduct of increased labour productivity or expansion. Labour productivity is dependent on education, efficiency and/or infusion of new technology. Alas, our budget has none of that.Our financial disease is not benign. At most, the Budget 2014-15 is an antibiotic. What we need is chemotherapy.

A pro-business budget

 

ISLAMABAD: Finance Minister Ishaq Dar here on Tuesday tabled in parliament the Rs3.936 trillion federal budget for 2014-15 with 4.9 percent deficit, giving more relief to the rich business community and only peanuts for the poor. He also jacked up the CNG price by Rs3 per kg.
The minister proposed to raise the salaries of government employees by 10 percent and the minimum monthly wage to Rs12,000 from Rs10,000. The minimum pension is being raised from Rs5,000 to Rs6,000.

Under the Benazir Income Support Programme (BISP), the poor will now receive Rs1,500 per month, Rs300 more compared to the previous fiscal. Now 5.3 million families will be supported instead of 4.1 million.

The government substantially reduced the subsidies to Rs203 billion from Rs323.020 billion, meaning that the masses will be exposed to more financial miseries.

The minister vowed to increase the GDP growth, to gradually rise to 7.1 percent by FY 2016-17, and said that inflation will be maintained in single digit throughout the medium term.

The most lethal step the government has taken is the huge reduction in subsidy to electricity consumers — from Rs245 billion to Rs156 billion — owing to which the tariff will jump up manifold.

The Rs3.936 trillion budget includes development budget of Rs806 billion consisting of the Federal Public Sector Development Program (PSDP) of Rs525 billion, foreign component of Rs120 billion and Rs162 billion to be generated by Wapda, NTDC and Pepco for some of their projects.

The huge amount of Rs1.325 trillion will be consumed for debt servicing and Rs700 billion for defence needs. However, the government has fixed an ambitious target of tax revenue at Rs3.129 trillion that includes the FBR taxes of Rs2.810 trillion and Rs319 billion from other tax measures.

Through non-tax measures, the government will collect Rs816 billion.The 4.9 percent budget deficit (Rs1.711 trillion) will be financed through external financing of Rs508 billion and domestic borrowing of Rs914 billion and estimated provincial surplus of Rs289 billion.

However, the consolidated budget outlay has been estimated at Rs4.074 trillion, which is 7.9 percent more than the size of the budget estimates of 2013-14. The Rs4.074 trillion consolidated budget includes Rs1.175 trillion out of which the provincial development budget would be at Rs650 billion and the federal share will stand at Rs525 billion.

With a view to taking care of the most vulnerable segments of the society, the finance minister announced a 200 percent increase in allocation of Rs118 billion for the Benazir Income Support Programme by inculcating the component of some schemes of PM’s youth program, saying the government has increased the monthly stipend by 25 percent for the poorest of the poor, from Rs1,200 to Rs1,500.

The government announced a 10 percent ad-hoc relief allowed to all the federal government employees with effect from July 1, 2014.

The minister said a 10 percent increase will be allowed to those employees in Grade-1 to Grade-15 drawing fixed medical allowance to those employees working in Grade-1 to Grade-15.

The post of superintendent has been upgraded from Grade-16 to Grade-17. One pre-mature increment will be allowed to employees of Grade-1 to 4. For welfare of the labour class, and in line with the increase in pay of government employees, the minimum wage rate is also being increased from Rs10,000 to Rs12,000.

The minister said that last year he had raised the minimum pension for government employees from Rs3,000 per month to Rs5,000, representing an increase of 67 percent. He announced further increase of Rs1,000 in minimum pension to make it Rs6,000. This means that the minimum pension has been doubled since 1st July, 2013. A 10 percent increase in pension will also be allowed to all retired federal government employees.

The government has instead of increasing the rate of capital gains tax from 10 percent to 17.5 percent with effect from July 1, 2014 has given relief to capital market keeping CGT rates at 12.5 percent for securities held up to 12 months and 10 percent for securities held for a period which is between 12 to 24 months, whereas the securities held for more than 24 months shall be exempted from CGT.

In order to attract Foreign Direct Investment in manufacturing, construction and housing sectors, the government has reduced corporate tax rate to 20 percent if the investment is in a new industrial undertaking or a construction or housing project to be set up by 30th June 2017 and at least 50 percent of the total project cost in the form of equity through FDI. “This will also generate employment, which is one of our major challenges,” the minister claimed.

To promote agricultural sector, the government has done away with customs duty on import of plastic coverings and mulch film, anti-insect net and shade net. Sales tax on high irrigation equipment and equipment for green house farming has been lifted.

The government has reduced the corporate tax rate by one percent from 34 percent to 33 percent and withholding tax on marriages and functions to 5 percent from 10 percent to provide the solace to middle class.

The minister also announced the relief for the disabled persons by reducing tax liability of such persons having income up to Rs1 million by 50 percent saying that the disabled persons need empathy and special consideration.

The government has reduced taxes on telecommunication sector on the argument that telecommunication has become a necessity for all segments of society. Telecom services are highly taxed as both FED and GST on services continue to be imposed on them. In order to simplify the tax regime, the government decides to withdraw FED from those provinces which have imposed GST on telecom services. In areas where FED shall continue to be collected, the rate has been reduced from 19.5 percent to 18.5 percent. The government has also reduced the rate of Withholding Income Tax on telephone services from 15 percent to 14 percent.

The government has, the minister said, also done way with the Income Support Levy saying Income Support Levy Act was promulgated through the Finance Act, 2013. The aim was to mobilise additional resources for the economically distressed persons. However, the public at large did not accept this measure as it was considered harsh and was perceived as double taxation. So the government has decided to repeal the Income Support Levy Act, 2013.

About development and promotion of ICT sector the minister said government is fully cognizant of the importance of information and communication technology and its potential role in trade, foreign direct investment, women empowerment, employment, education, national competitiveness and ultimately the economic growth. “We are making adequate provisions, the minister, announced to establish Universal e-Telecentres across the country to general local employment.

In the first phase, 500 Telecentres will be established in the four provinces and Islamabad. “An investment of approximately Rs12 billion is to be made on this program over the next three years.”

The minister also announced the Prime Minister’s ICT Scholarship Program for students belonging to rural and semi urban areas. “This year, Rs125 million have been allocated out of National ICT R&D Fund to provide 500 scholarships in a transparent manner.”

A sizeable allocation of Rs20 billion has been made for 188 projects of the Higher Education Commission (HEC), which will support development plans of different universities all over the country. It may be noted that on the current side also a hefty allocation of Rs43 billion is made for HEC. Thus a combined outlay of Rs63 billion will be made for higher education. The combined allocation represents about 10 percent increase, which is sizeable considering the tight fiscal conditions prevailing in the country.

In the health sector, the minister said the federal government has therefore allocated Rs26.8 billion. Our major focus will be polio eradication. An emergency plan has been made for this purpose and the federal government will work closely with the provincial jurisdictions to eradicate polio from Pakistan. Additionally the budget will also fund the Expanded Program of Immunization (EPI), National Maternal Neonatal and Child Health Program, National Program for Family Planning and Primary Healthcare and several national programs for prevention and control of important diseases such as blindness, TB, Hepatitis and AVN Influenza.

To increase exports of the country, the minister announced major initiatives that also include setting up of EXIM Bank of Pakistan that will enhance export credit and reduce cost of borrowing for exporting sectors on long term basis and help reduce their risks through export credit guarantees and insurance facilities.

The bank will provide liquidity to exporters. Its authorised capital will be Rs100 billion while the initial paid-up capital will be Rs10 billion. Legal framework for the establishment of the bank will be developed through an act of Parliament.

Under Exports Refinance Facility (ERF), he said, the government, through the State Bank of Pakistan (SBP), has arranged to reduce its mark-up rate on exports finance from 9.4 percent to 7.5 percent, which will bring it in line with such rate prevailing in the countries competing with Pakistan which will reduce the financial cost of exporters by 2 percent.

He also said that through the SBP has arranged Long Term Finance Facility to reduce its mark-up rate on long term financing facility for 3-10 years duration from around 11.4 percent to 9 percent from July 1, 2014 which will reduce financial cost of exporters by 2.4 percent.

About the Export Development Fund (EDF) he said it was established through the contributions of the exporters for the promotion of exports. However, over the years projects undertaken with fund’s resources were not entirely helpful to exports. The EDF Board has been reconstituted and its organisation is overhauled with a view to making it more responsive and effective for the benefit of exporters.

He also announced the establishment of Pakistan Land Port Authority to transform land ports into efficient facilitators of trade while being responsive to risks such as security issues, smuggling and human trafficking. This measure will help Pakistan to increase its exports through the overland route where numerous opportunities are offered by regional countries and connectivity to northern and western corridors.

Talking of textiles sector which is the mainstay of country’s exports, the minister said, as it accounts for more than half of country’s exports. Its performance has been affected due to poor crops, delays in introduction of quality seeds and regulatory approvals for introduction of BT cotton, widespread energy shortages, numerous local taxes and levies, high cost of finance and restricted trade regimes adopted by importing countries.

“A meaningful export promotion policy will not be possible unless we provide the much-needed support for the development of this sector.” Mr Dar said that drawback for local taxes and levies to be given to exporters of textile products on FOB values of their enhanced exports if increased beyond 10 percent (over last year’s exports) at the following rates: The duty draw back to be given to porters on garments by 4 percent, made-ups 2 percent and processed fabric 1 percent.

“Mark up rate for Export Refinance Scheme of State Bank of Pakistan is being reduced from 9.4 percent to 7.5 percent from 1st of July 2014.”

“The Expeditious Refund System is being improved and a fast track channel for manufacturers-cum-exporters is being created.” The minister said he has directed FBR to dispose of all their pending Sales Tax refund claims before September 30, 2014. In future, all admissible refund claims of exporters shall be disposed of within 3 months, if not earlier.

Textile industry units in the value added sector would be provided Long Term Financing Facility (LTFF) for upgradation of technology from State Bank of Pakistan at the rate of 9 percent for 3-10 years duration. The minister said that Textile sector enjoyed duty free import of machinery under textile policy 2009-14. This facility will end on 30th June 2014 (SRO-809). It is proposed that in view of the need to take full advantage of GSP plus facility, this concession would be allowed for another two years.

A new vocation training program at the cost of Rs4.4 billion will be launched to train 120,000 men and women, over the five-year period, for skills required in the textile sector, especially in the value added sector such as garments and made ups. Monthly stipend of Rs8,000 per month will be given during three month training.

The minister announced to introduce Credit Guarantee Scheme in order to encourage banks for financing to unbanked small farmers.

The government, through the State Bank of Pakistan, will provide guarantee to commercial, specialised and micro-finance banks for up to 50 percent loss sharing. The scheme will cover farmers having up to 5 acres irrigated and 10 acres non-irrigated land holdings. It will benefit 300,000 farmer households/families with a loan size up to Rs100,000. Total disbursement under this scheme will be Rs30 billion.

He said that another initiative of Reimbursement of Crop Loan Insurance Scheme (CLIS) Premium has also been introduced to cover the risk to various crops for farmers with landholdings of 12.5 acres.

From this budget, the scope of CLIS premium reimbursement is being enhanced up to 25 acres. All farmers obtaining loans for production of 5 major crops are eligible to benefit from this scheme and 700,000 farmer households or families will benefit from this scheme. Total budget cost of the scheme is Rs2.5 billion.

He also announced the reduction in Sales Taxes on tractors saying the previous government levied sales tax on tractors which from January 1, 2014 stands enhanced to 16 percent. This has adversely affected local buying of tractors. To encourage use of tractors by the growers it is proposed that the sales tax will continue to be charged at the reduced rate of 10 percent.

The minister said that the government has decided to increase the credit lines to agriculture up to Rs500 billion in 2014-15 from Rs380 billion which will help increase the growth in agriculture sector.

The minister also said that government is going to give incentives for Processing Industries of Special Areas in Makran Division, Gilgit-Baltistan, Swat District and Fata regions. The agriculture produce suffers great losses for lack of processing and transport facilities. To encourage establishment of processing units at such places, the government is introducing a policy to support processing projects in Makran, Gilgit-Baltistan, Swat Valley and Fata.

These units will enjoy duty and tax-free import of machinery not locally manufactured and will also have access to SBP LTF facility and 5 years tax holiday. Additionally, a concessionary long-term financing facility shall be provided to them through State Bank of Pakistan.

He said that the federal government also decided to provide 50 percent airfreight subsidy for horticulture produce from Gilgit-Baltistan.

The government, the minister said, has specially designed a program to provide housing credit to low cost housing units to enable the poor to have their own houses. Banks will provide loans of up to Rs1 million and financial institutions, under this scheme while the government will guarantee 40 percent of the portfolio amount. The scheme will cover all areas of Pakistan and 25,000 loans worth Rs20 billion will be provided through this innovative method of supporting low and middle-income families.

A Mortgage Refinance Company, Mr Dar said, is being established with a broad shareholding of the government of Pakistan, commercial bank, development finance institutions, multilaterals and others for this purpose, to generate long-term liquidity for housing finance.

Total paid up capital of the company would be Rs6 billion. The company will provide refinance facilities through purchases of loans from the financial institutions engaged in loan origination and packaging them for sale to long-term investors. The government will invest Rs1.2 billion in the equity of the company.

In addition, he said, the amount of Rs6 billion has been kept in the budget for PM’s low income housing scheme.

Advance Tax on First and Business Class Airline Tickets, the minister said it is proposed that airlines may collect advance tax @ 3 percent on the sale of first class and club or executive class air tickets if the passenger is a compliant taxpayer (i.e. those who filed their income tax returns for the preceding tax year), and 6 percent tax if the passenger is a non-compliant person. The passengers travelling through the economy class shall be exempted from this tax to ensure that working classes and students travelling to foreign destinations are not burdened by this measure.

“The government has imposed advance tax on purchase of immovable property,” the minister said adding that real estate sector is attracting a major chunk of investment in an attempt to make quick profits largely through speculative buying and selling. The investment in this sector, unless it leads to construction, is unproductive and needs to be channelised to more productive sectors. To document and bring into tax net the real estate transactions , Mr Dar said, an adjustable advance tax be collected on purchase of immovable property.

“The proposed rate of tax is 1 percent for complaint taxpayers and 2 percent for non-compliant persons.” However, the minister said, properties with value less than Rs.2 million and schemes introduced by the government for expatriate Pakistanis will be excluded from this provision.

Similarly, the rate of adjustable capital gains tax on sale of immovable property is proposed to be enhanced from 0.5 percent to 1 percent for the non-compliant persons.

The government has imposed advance tax of 7.5 percent on the monthly bill of Rs100, 000 per month and higher advance tax on interest income and dividends, the minister said saying that for the persons who are non-compliant, it is proposed that 5 percent additional adjustable advance tax be deducted from them on payment of dividend and interest.

However, they can claim adjustment of the additional tax paid if they file return. The additional tax on interest shall not be deducted in case of people earning income on interest up to Rs500,000 in order to avoid hardship to low and middle-income earners.

The government also imposed higher advance tax on cash withdrawal by non-filers and the non-compliant will have to pay additional tax on cash withdrawals at 0.2 percent, additional tax on booking with manufacturers or registration of vehicles.

The non-filers will have to pay higher advance tax on car registration. They will have to pay a higher rate of tax at the time of registration and payment of token tax on motorcars and SUVs.

Removal of Inequities: There are certain distortions and inequities in the tax system. The tax structure favours choice of one entity over another. In this regard, distortions and inequities in the mutual fund industry and other corporate entities are proposed to be removed.

An alternate corporate tax @ 17 percent has been imposed on accounting income. The companies will be taxed at ACT or corporate tax whichever is higher. Facility of carrying forward ACT up to 10 years and exclusion of exempt income has also been proposed.

About tax rates for services, the minister said that at present rate for deduction of tax on services are 6 percent and 7 percent for corporate and non-corporate taxpayers respectively. Considering that persons providing or rendering services usually enjoy high profit margins due to low costs, the existing rates are considered lower. Hence, to rationalise, it is proposed to enhance tax rate on services to 8 percent in corporate cases and 10 percent in other cases.

The government has also decided to apply tax on foreign institutional investors, the minister said that currently, the foreign institutional investors neither file returns nor their tax is collected on capital gains. The minister said that this measure will broaden the tax net. The minister said that NTN requirement is now mandatory and compulsion condition for seeking commercial/industrial electricity and gas connections.

The minister also said that those retailers who operate as part of national and international chain stores; or operate in air-conditioned shopping plazas; or have machines for credit or debit cards; or have monthly electricity bills in excess of Rs50,000 will be required to pay sales tax in the normal regime and to keep electronic cash register of approved-specifications in order to record their transactions. And the retailers having electricity bills of less than Rs20,000 in a month shall be charged only 5 percent of the bill as sales tax on retail sales, while those with higher bills shall be charged 7.5 percent as sales tax on retail sales.

Mentioning about sales tax on domestic sales of export industries, the minister said that the government desires to encourage exports.

But at the same time, the facility meant for exporters should not extend to domestic sales, otherwise it will create distortions in the market. SRO 1125(I)/2011 was issued in order to encourage the five major export-oriented sectors – textiles, leather, carpets, surgical and sports goods.

However, under this SRO, even imported finished goods were enjoying concessionary rates of sales tax. Because of this notification, there was a great disparity between the concessionary rates of sales tax on imported finished goods of these five sectors sold in the local market against the standard rate. This was leading to distortion, evasion and malpractices.

About rationalisation of sales tax on steel Sector, he mentioned that the steel sector had been paying fixed sales tax at the rate of Rs7 per unit of electricity up to February 2013. But this rate was reduced to Rs4 per unit of electricity without any rationale, which is much below the normal rates. He said, “I am pleased to announce that the steel sector has expressed its resolve to come forward and contribute to the national cause, and all stakeholders have agreed to revive the rate from Rs4 to Rs7 per unit of electricity.” The government has also accepted their demand to collect withholding tax of their purchases through their electricity bills @ Rs.1 per unit of electricity.

The government has increased taxes on tobacco as Pakistan is a signatory to WHO’s Framework Convention on Tobacco Control (FCTC), which demands increase in prices and taxes of tobacco to discourage consumption.

Budget 2014-15 presented in NA

ISLAMABAD: Finance Minister Ishaq Dar is presenting the budget for the fiscal year 2014-15 with a total outlay of Rs3.945 trillion in the National Assembly.

Earlier, the budget was approved by the federal cabinet during a meeting chaired by Prime Minister Nawaz Sharif.

Budget Recommendations:

Rs15 billion earmarked for the construction of Diamer-Basha dam: Dar
Rs30 billion allocated for Karachi-Lahore Motorway
Rs26.8 billion allocated for Health sector
Rs63 billion allocated for Higher Education
Funds have been allocated for Karachi Circular Railway
500 locomotives will be added to Pakistan Railways
Rs77 billion has been earmarked for uplift schemes, salaries and pension in railway sector.
Rs525 billion allocated for public sector development
Rs118 billion allocated for Benazir Income Support Programme
Monthly stipend for Benazir Income Support Programme has been raised by Rs300 to 1500 per month.
Economic growth has reached 4.14 per cent
Inflation rate was 8.6 per cent in current fiscal year
Federal Excise Duty reduced from 19.5 to 18.5 per cent
Decrease in telephone service withholding tax from 15 to 14 per cent
10 per cent ad-hoc relief for government employees
Grade 1-15 officers to be provided Rs1,000 fixed medical allowance
Minimum wage increased from Rs10,000 to Rs11,000
Minimum pension raised from Rs5,000 to Rs6,000

A budget based on foreign funds, ambitious targets

 

ISLAMABAD: The Nawaz Sharif government is going to present a Rs3.9 trillion federal budget for 2014-15 on Tuesday, which is based on foreign inflows and an ambitious revenue target of Rs2.8 trillion.
A source close to the finance minister said the budget would be of 3.9 trillion rupees.The revenue generation will depend mainly on withdrawal of many SROs, tax exemptions and over Rs530 billion new taxes and administrative measures.

The tight budget deficit target of 4.8 percent will not provide the government enough fiscal space to stimulate the economy and achieve the GDP growth target of 5.1 percent.of SROs, so that the industrial growth could not be impacted.

For the common man and the poor, the federal budgets in Pakistan have now become irrelevant as oil, gas and electricity prices, which have instant impact on inflation and kitchen items, have been linked to international prices and are regulated by the regulatory authorities.

However, one thing in every budget affects the masses and that is the increasing incidence of indirect taxation.And according to the vibes emanating from the corridors of power for the coming budget, the volume of indirect taxation is also feared to further increase, thereby, making the lives of masses more miserable as the government is not inclined to take solid steps to increase the volume of direct taxes.

This time the government will have to spend a mammoth amount of Rs1.347 trillion on debt servicing alone.The government has decided to come up with the defence budget of over Rs700 billion, which is feared to increase keeping in view the developments taking place in neighbouring countries.

The federal government, which will this time give a hefty amount Rs1.73 trillion to provincial governments from the divisible pool under the NFC Award, should seek financial share from the federating units to cope with the expected increase in defence expenditure as all the provinces are bordering units.

Under the expenditure side, the government is likely to allocate Rs215 billion for pensions and Rs285 billion for the federal government employees. The government has incredibly reduced the subsidies to Rs229 billion, meaning that power tariff will increase and masses will not be able to get solace in the next budgetary year.

But in view of the expected campaign by the main political parties against the government, which may gain momentum after the holy month of Ramazan, the government will be left with no option but to increase the subsidy to appease the masses.

So the exercise to drastically cut the subsidy may end up going nowhere. The government has also decided not to allocate any amount in the next budgetary year to cope with the circular debt. This shows that the government will not spare any one who will be responsible for the emergence of the circular debt, but what about the current circular debt that has increased to Rs350 billion.

Coming to the uphill task of revenue target of Rs2.8 trillion, the government seems to be trapped under the NFC Award.

The previous governments, including the Nawaz government, have never achieved any revenue target so far and this year the sitting government has revised downward its revenue target for the outgoing financial year and has reportedly halted Rs100 billion refunds of many business establishments just to perk up the stats.

However, the target for the next budgetary year is Rs2.8 trillion and independent economists are of the view that the government even with utmost efforts will be able to collect not more than Rs2.6 trillion.

The government has already approved a whopping Rs1.310 trillion development budget for 2014-15 against Rs1.150 trillion allocated for the current financial year. Out of Rs1.150 trillion, about Rs660 billion is likely to be spent by the end of the current fiscal. The provinces could not spend on their development schemes mainly because of their inability to spend and late release of funds.

On top of that when an ambitious development budget is announced, the slippages start appearing from that particular day owing to which the whole development budget gets compromised and the governments find it easy to cut these budgets to achieve the deficit target.The Nawaz government, in the ongoing financial year, has already slashed the development budget by Rs100 billion.

PTI govt in KP may struggle to pass budget

PESHAWAR: The ruling Pakistan Tehreek-e-Insaf (PTI) and its allies in Khyber Pakhtunkhwa Assembly would definitely have difficulty in passing the next annual budget if the disgruntled members including deputy speaker from the treasury benches boycotted the upcoming budget session.

The 14-member ‘forward bloc’ led by PTI MPA Qurban Ali Khan from Nowshera had walked out from the assembly proceedings in protest against what they called ‘false and fabricated’ campaign against Deputy Speaker Imtiaz Shahid Qureshi.

They threatened to boycott the budget session if their grievances were not addressed and the elements behind the smear campaign against the deputy speaker and his family were not exposed.

Though Khyber Pakhtunkhwa Assembly Speaker Asad Qaiser formed a committee to probe the matter, the disgruntled PTI lawmakers didn’t end the protest and stayed away from the assembly business.

In the 124-member House, the PTI and its coalition partners, Jamaat-e-Islami and Awami Jamhoori Ittehad Pakistan, enjoy the support of 69 members including an independent MPA Jamshed Mohmand. It would be difficult for the treasury benches to pass the budget if the 14 PTI dissidents stick to their guns.

On the other hand, the five-party opposition benches would definitely give a tough time to the government as the 10-member Qaumi Watan Party would be more aggressive against Chief Minister Pervez Khattak-led government as the Aftab Sherpao-headed party was part of the treasury benches during the last budget session in 2013.

When contacted, Qurban Ali Khan said that they had not taken any step against the party manifesto or their own government in the provincial assembly, but had sought justice for Deputy Speaker Imtiaz Shahid Qureshi.

“We are waiting for Imran Khan’s return to the country and the decision of the committee formed by the speaker. We have no trust in some of the government functionaries,” said Qurban Khan, who was elected to Khyber Pakhtunkhwa Assembly from PK-16 Nowshera.

Dar to present Rs3.8 trillion budget tomorrow

 

ISLAMABAD: The government is all set to present its second federal budget with an outlay of about Rs3.864 trillion for the fiscal year 2014-15 before parliament on Tuesday (tomorrow).
A special budget session of parliament (National Assembly and Senate) has already been summoned by the president.Finance Minister Senator Ishaq Dar will lay the budget proposals for the financial year 2014-15 in the House, sources said adding these budget proposals will be presented first for approval before the federal cabinet in its special session to be chaired by Prime Minister Nawaz Sharif.

The national budget for the upcoming financial year (2014-15) envisages revival of the economy and overcoming the challenges. “Overcoming the energy crisis, stabilisation of the economy, cutting down the non-development expenditure, enhancing productivity through new growth strategies, reducing the fiscal deficit and inflation, enhancing revenue collection and welfare of the people will feature as priorities in the upcoming budget,” they added.

The budget will also focus on social sector development and revenue enhancement, besides reforms will also be introduced for improving governance and boosting the private sector investment.

The National Economic Council (NEC), with Prime Minister Nawaz Sharif in the chair, has already approved the Annual Plan 2013-14 and proposed the Annual Plan for 2014-15 and Vision-2025.

The NEC has also approved the allocations for the Diamer Bhasha Dam, Karachi Coastal Power Project, Dasu Hydro power project, Neelum Jehlum hydro power project, Chashma NPP, Jamshoro power project, Tarbella Extension IV project, Nandipur power project, Chichon-ki-Malyan Power project, Gomal Zam project, Kurram Tangi Dam and Golan Gol hydro power project.

Infrastructure projects including the Lahore-Karachi Motorway, Hasanabdal-Havelian-Mansehra Road project, Peshawar Northern Bypass, Raikot-Islamabad project, Gwadar Airport, Gwadar Free Economic Zone and construction of a jetty and infrastructure development at the Gaddani Power Park also received the approval of the NEC.

The government has already approved Rs53.5 billion for land acquisition cost of the Lahore-Karachi Motorway of which 25.5 billion have already been released. As part of decent democratic traditions in Pakistan, the opposition parties are given maximum time to take the floor and freely express their point of view on budget allocations in the House. The valuable proposals and suggestions from either sides are taken care of by the finance minister while winding up the debate.

Apart from diplomats and other dignitaries, the President Federation of Pakistan Chambers of Commerce and Industry (FPCCI) Zakaria Usman, Zonal Chairman PFCCI Munawar Mughal, Saarc Chamber of Commerce and Industry Pak Chapter VP Iftikhar Ali Malik have also been invited for the first time by Dar to witness the budget session proceedings.Annual budget sessions of the Punjab, Balochistan, Sindh and Khyber Pakhtunkhwa provincial assemblies will be convened soon after presentation of the national budget.Security arrangements have been beefed up in and around the Parliament House.

NEC approves Rs1.310 trillion development budget for 2014-15

 

ISLAMABAD: The National Economic Council that met here on Thursday with the prime minister in the chair accorded approval to the country’s largest ever development budget of Rs1.310 trillion for 2014-15 with projected GDP growth of 5.1 percent and an inflation target of 8 percent, a senior official who was part of the meeting told The News.
The supreme economic body also approved the Pakistan Vision 2025 with the prime minister saying that this vision was our development roadmap and Pakistan would grow as this vision would ensure the best usage of our resources as was done by developed countries.

The NEC also approved allocations for the Diamer Bhasha Dam, Karachi Coastal Power Project, Dasu hydropower project, Neelum Jhelum hydropower project, Chashma NPP, Jamshoro power project, Tarbela Extension IV project, Nandipur power project, Chichon-ki-Malyan power project, Gomal Zam project, the Kurram Tangi Dam and Golan Gol hydropower project.

Citing the significant allocations for power projects, the prime minister commented that it showed the seriousness and commitment of the government towards alleviating power scarcity. The PM said that they had released Rs37 billion for the Diamer-Bhasha Dam in one calendar year in order to expedite the project.

Infrastructure projects including the Lahore-Karachi Motorway, Hasanabdal-Havelian-Mansehra Road project, Peshawar Northern Bypass, Raikot-Islamabad project, Gwadar Airport, Gwadar Free Economic Zone and the construction of jetty and infrastructure development at the Gadani Power Park also received approval of the NEC. A feasibility study for the construction of the Havelian-Raikot railway line was also approved. The PM said that the Rs53.5 billion was the land acquisition cost of the Lahore-Karachi Motorway of which Rs25.5 billion have already been released.

The Rs1.310 trillion development budget includes a federal development component of Rs525 billion and provincial component of Rs650 billion with Rs135 billion to be generated by Wapda, NTDC and Pepco for some vital projects, as against the consolidated development budget of Rs1.150 billion for the ongoing fiscal 2013-14.

However, the sources also said that the provincial chief ministers in the meeting said that as far as the provincial share of Rs650 billion in the development budget was concerned, it would have been better to first consult them as they would prefer to fix their development budget keeping in view their fiscal limits.

An amount of Rs40 has been allocated for the Pakistan Railways, Rs48 for nuclear energy, Rs 36 billion for the PM’s initiative for less developed areas that include allocation of Rs15 billion for Balochistan, Rs8 billion for Sindh, Rs4 billion for KPK, Rs3 billion for AJK, Rs4 billion for FATA and Rs2 billion for Gilgit-Baltistan.

The NEC approved allocation of Rs260 billion for the water and power sector (Rs166 billion for the power sector and Rs84 billion for the water sector), Rs1.5billion for MDGs and the community sector, Rs51 billion for education and health, Rs163 billion for transport and communication.

However, for the communication sector alone Rs113.576 billion has been allocated for the ongoing 57 schemes and Rs8.356 billion for new schemes in the communication sector. For the New Islamabad Airport, a new approach road worth Rs16 billion has been approved and an allocation of Rs10 billion for the next financial year and for the ongoing road project for the same airport, Rs2 billion allocation has been proposed.

The NEC also approved the projected GDP growth of 5.1 percent as had earlier been worked out by the National Account Committee (NAC) and then backed by the APCC. The projected target of GDP of 5.1 percent has been worked out keeping in view the projected growth of agriculture by 3.3 percent, industry by 6.8 percent and services by 5.2 percent. Nominal GDP is targeted to grow by 13.5 percent and GNP per capita is projected at Rs160,443.

However, the press release says, Ahsan Iqbal, Federal Minister for Planning, Development and Reform, outlined the seven pillars of Vision 2025 while briefing the NEC.

NEC allowed the Planning Commission to publish the details of this Summary in the form of a document titled “Pakistan Vision 2025” for public information and directed Ministries/Provinces/Special Areas and Public Sector agencies to make concerted efforts in coordination with the Ministry of Planning, Development and Reform to effectively implement the proposed Pakistan Vision 2025. Moreover, the Planning Commission was authorised for regular monitoring of progress to translate the Vision into reality through a Performance Delivery Unit against key performance indicators (KPIs) and approved the framework for the eleventh five year plan within the perspective of Vision 2025.

While discussing the development projects in Balochistan, the CM Balochistan pointed out the delay and corruption in the Quetta water supply scheme. He siad that Rs10 billion had been spent but on the ground there was no development. The prime minister directed to hold enquiry into the matter and fix the responsibility. He also asked CM Balochistan Dr Abdul Malik to monitor the projects himself.

The NEC also approved construction of a cancer hospital in Islamabad. The PM directed to prepare plan for constructing a cancer hospital in every provincial headquarters including Gilgit-Baltistan, AJK and FATA.

Senior minister Khyber Pakhtunkhwa Sirajul Haq raised the matter of the delay in the completion of the Lowari Tunnel project due to paucity of funds. The PM assured to look into the matter and directed to specify the required funds for completion of the project. He said that he would personally visit the project along with the governor and chief minister KPK to see the on-ground situation. The PM said that none of the development projects would be ignored. The PM also warned against delays in the projects.

Addressing the query of the governor KPK regarding development funds for Fata, the prime minister said that Fata needed special attention in our development strategy and the development funds for Fata would be rationalised.

Chief minister Balochistan raised the issue of funding of transmission lines for far flung areas, the issue of power shortages in Balochistan and water supply scheme for Gwadar. The PM said that nature had endowed Balochistan with vast resources of solar energy and we needed to tap this energy. He directed to prepare a feasibility for installing solar power panels in Balochistan. It would not only resolve the energy shortage but also provide affordable energy to locals, he added. Prime minister directed to plan the water supply scheme and assured funding by the federal government.

Muhammad Saleh Zaafir adds: While briefing the NEC, Federal Minister Professor Ahsan Iqbal outlined the seven pillars of Vision 2025 including putting people first, Developing Human and Social Capital, Achieving Sustained, Indigenous and Inclusive Growth, Governance, Institutional Reform and Modernisation of the Public Sector, Energy, Water and Food Security, Private Sector-Led Growth and Entrepreneurship, Developing a Competitive Knowledge Economy through Value Addition and Modernisation of Transportation Infrastructure and Greater Regional Connectivity.

Defence budget cannot be revisited: Dar

 

WASHINGTON: Federal Minister for Finance Senator Muhammad Ishaq Dar said on Monday that the defence budget could not be revisited and it was incumbent upon the government to broaden the tax net.
He announced the expanding of the tax net immediately after having successfully negotiated fresh loans from the International Monetary Fund (IMF) and the World Bank here.Addressing a press conference at the Pakistan Embassy following his four-day US tour, Dar said if taxes were not raised, more loans would have to be taken.

The finance minister said loans had to be re-paid and, as such, there was no option but to broaden the tax net. Revisiting the defence budget was not possible, while salaries and pensions of government employees were already quite low and there was no room for any cuts.

In this backdrop, Dar said the only option left for the government was to increase the tax net.A spokesman for the finance ministry, meanwhile, said that the priority of the government was to increase tax revenue by broadening the tax net and by including into the system people who were not paying their due taxes. He said in the first nine months of the currentyear, the government achieved around 17 percent increase in the tax collection as compared to the last year.

Ishaq Dar also said that things were shaping up for Pakistan’s economic boost as macroeconomic stability had earned the country huge confidence of international investors and financial institutions.

Wrapping up a hectic visit to Washington, during which he had a series of meetings with World Bank, IMF and US officials, Dar said that major financial institutions now agreed with Islamabad that Pakistan’s GDP growth would surpass their earlier projections.

“The World Bank and the IMF now agree that the country would chalk up a better economic growth than earlier projections and our projection for the year is 4 percent plus,” he told Washington-based Pakistani journalists.

Earlier, Ishaq Dar held a very productive meeting with Ms Justine Greening, British Secretary of State for International Development in the World Bank, at Washington DC on Monday.Ms Greening expressed her pleasure on the overall progress Pakistan was making particularly in the taxation sector.

Defence budget cannot be revisited: Dar

 

WASHINGTON: Federal Minister for Finance Senator Muhammad Ishaq Dar said on Monday that the defence budget could not be revisited and it was incumbent upon the government to broaden the tax net.
He announced the expanding of the tax net immediately after having successfully negotiated fresh loans from the International Monetary Fund (IMF) and the World Bank here.Addressing a press conference at the Pakistan Embassy following his four-day US tour, Dar said if taxes were not raised, more loans would have to be taken.

The finance minister said loans had to be re-paid and, as such, there was no option but to broaden the tax net. Revisiting the defence budget was not possible, while salaries and pensions of government employees were already quite low and there was no room for any cuts.

In this backdrop, Dar said the only option left for the government was to increase the tax net.A spokesman for the finance ministry, meanwhile, said that the priority of the government was to increase tax revenue by broadening the tax net and by including into the system people who were not paying their due taxes. He said in the first nine months of the currentyear, the government achieved around 17 percent increase in the tax collection as compared to the last year.

Ishaq Dar also said that things were shaping up for Pakistan’s economic boost as macroeconomic stability had earned the country huge confidence of international investors and financial institutions.

Wrapping up a hectic visit to Washington, during which he had a series of meetings with World Bank, IMF and US officials, Dar said that major financial institutions now agreed with Islamabad that Pakistan’s GDP growth would surpass their earlier projections.

“The World Bank and the IMF now agree that the country would chalk up a better economic growth than earlier projections and our projection for the year is 4 percent plus,” he told Washington-based Pakistani journalists.

Earlier, Ishaq Dar held a very productive meeting with Ms Justine Greening, British Secretary of State for International Development in the World Bank, at Washington DC on Monday.Ms Greening expressed her pleasure on the overall progress Pakistan was making particularly in the taxation sector.

Finance Minister chairs meeting to roll out preparation of next budget

ISLAMABAD: Finance Minister Senator Mohammad Ishaq Dar on Friday chaired a meeting to roll out the preparation of next year's Budget at the Finance Ministry here.
Dr. Waqar Masood, Finance Secretary gave a detailed presentation on the next budget.
The Finance Minister expressed satisfaction on fiscal results for the first eight months of the current year which showed a deficit of 3.2pc as compared to the proportionate target up to February of 3.5%.
He stressed the need for continued vigilance on expenditure in line with revenue receipts so that the budgetary targets are achieved without fail.
Commenting on the preparatory exercise presented in the meeting, the Finance Minister emphasized that austerity will continue to remain the hallmark of PML-N's budget strategy and fiscal management.
He further underlined the need for clear and meaningful indications of budgetary ceilings to all federal ministries and for Public Sector Development Programme (PSDP) so that they can prioritize and formulate their expenditure proposals well in time.

China announced biggest hike of 12.2 percent in defence budget

China announced a biggest hike of 12.2 percent in defence budget on 5 March 2014. The hike of 12.2 percent will make the Chinese government spend 808.2 billion Yuan or 130 billion US dollar in 2014-15 on defence. This is the biggest increase in three years.
The estimated defence budget is 18 billion US dollars more than in 2013-14, when the budget rose by 10.7 percent. China is the second in place after the United States which spends more than 600 billion dollar in 2014.
China has been increasing the expenditure on defence since it seeks to increase its influence in the Asia Pacific. The hike, according to Chinese military, is the need to counter a high risk security environment in the china region which was recently marked by territorial tensions with many neighbours. The hike will comprehensively enhance the revolutionary nature of the Chinese armed forces, further modernize and upgrade and continue to raise their deterrence and combat capabilities.
India in its Interim Union Budget 2014-15 allocated 224000 crore rupees or 37.15 billion dollar for the national defence. The allocation represents 9.98 percent increase over the 2013-14 defence budget.

Obama budget sets up election-year debate with Republicans

WASHINGTON: President Barack Obama proposed new tax credits and job-training programs for US workers on Tuesday in a 2015 budget that highlights stark differences with Republicans, who favor a reduced government role in promoting economic opportunity.

The election-year blueprint is all but certain to be rejected by the Republican-controlled House of Representatives and stands little chance of passage.

But it sets out the Democratic president's policy priorities ahead of November congressional elections, in which his party hopes to keep control of the US Senate and avoid losing ground in the House.

The blueprint for the 2015 fiscal year that begins on Oct. 1 would increase tax credits for the working poor, boost spending on roads and bridges and expand early-childhood education.

Obama's proposal signals a shift away from last year's emphasis on deficit cutting to a greater focus on fighting poverty, a goal the president is highlighting as he faces less than three years left in office.

The debate over Obama's controversial healthcare reform law is likely to feature prominently in the elections, but poverty reduction and Americans' slow recovery from the 2007-2009 recession are also likely to be major themes.

House Budget Committee Chairman Paul Ryan, a potential Republican presidential contender in 2016, argued in a report on Monday that the government had barely made a dent in combating poverty over the past 50 years despite massive spending.

Obama and Ryan disagree on the role government should play in poverty reduction, but they both back the Earned Income Tax Credit, an anti-poverty measure that is meant to encourage low-income Americans to continue working.

Obama's budget proposes expanding the program to cover some 13.5 million people who do not have children. It would also make the program available to younger workers who are not currently eligible.

"The EITC for families with children lifts millions out of poverty each year and helps about half of all parents at some point in their lives," Obama wrote in his budget document.

"But as a number of prominent policymakers, both progressive and conservative, have noted, the EITC does not do enough for single workers who do not have kids."

The expansion, which would cost $60 billion, would be funded by closing loopholes such as the tax break for "carried interest," profits earned by wealthy investors who run private equity and other funds. Obama has long sought to end that tax break, which allows financiers to treat such income as capital gains, making it subject to a tax rate of only 20 percent, instead of the nearly 40 percent top rate on ordinary income paid by the highest earners.

Representative Dave Camp, the Republican chairman of the powerful House Ways and Means Committee, also proposed last month to "clean up" the carried interest deduction, but tax reform is not expected to get traction in Congress this year.

SAVINGS, NO OLIVE BRANCH:

Obama will unveil the document during a visit to a local elementary school, giving him a chance to highlight the proposal's emphasis on boosting funding for education, which has gotten little support from opposition lawmakers.

The White House signaled last month that its new budget would not extend the olive branch to Republicans that was offered in its proposal a year ago.

Obama dropped a suggestion to change how the government calculates inflation for Social Security and other federal benefits that could have led to income drops for older Americans.

The proposed cost-of-living change, which was unpopular with Obama's Democratic allies, was meant to show Republicans the president was serious about deficit reduction. White House officials said Obama abandoned it after Republicans declined to offer concessions of their own.

Overall, Obama's proposed budget for 2015 would spend $3.9 trillion, leading to a $564 billion budget deficit, or 3.1 percent of the nation's gross domestic product. That would be down from a $649 billion deficit, or 3.7 percent of GDP, in fiscal year 2014.