Pak official for accountability of defence budget

Ishfaq A Mughal

The Pakistani Finance Minister Dr. Abdul Hafeez Sheikh categorically said ‘although defense expenditure is necessary for the country but it should be under check and balance.

Pakistan government, which is fighting war against war on terror as a front state since 2001 with western allies, allcocated Rs 495 billion ($5.8 billion) in upcoming budget, which is 12 percent higher than outgoing fiscal year. The overall outlay was Rs 2.76 trillion ($27.5 billion) with the deficite of Rs 850 billion ($10 billion).

Addressing post-budget press conference here on Saturday, Sheikh said the defense for any country, in the world that we live in, was vital. The nation is ready to scarify for this but check and balance on it necessary, he said. He said defense of the country being foremost priority, necessary allocations have to be made for the sector.

He said only two taxes including income tax and sale tax will be remain in future with simplified system to facilitate people and remaining taxes have no future. He pointed out that the government has reduced GST from 17% to 16% which would have a negative impact of 36 billion rupees on revenues, the Special Excise Duty, which was levied on 100 items, has altogether been abolished. This would have soothing impact on overall price situation; the Regulatory Duty on 392 items out of 397 has also been abolished completely. It is now imposed only on five items of cigarettes, ammunition, betel-nut, big vehicles and imported tiles and sanitary-ware for bathrooms.

The Finance Minister said the government intends to completely abolish the Federal Excise Duty in three years as a first step it has been withdrawn on 15 items. It has also been reduced from 12 to 6% on soft-drinks and from 700 rupee per metric tons to 500 metric tons on cement.

Withholding tax on cash withdrawal has been reduced from 0.03 to 0.02% and this shows that the government was fully alive to the complaints and concerns of the people on imposition of this tax.

Exemption limit for income tax has been raised from the existing three hundred thousand to three hundred and fifty thousand rupees.

He said the new budget envisages tax exemption for five years for those who would set up industry from their own sources.

Dr. Hafeez Sheikh said the budget sends a clear message that instead of add more burden on the existing tax payers, it is time for those who have been out of the net for the last 62 years to pay their taxes.

The Minister dispelled the impression that withdrawal or reduction in subsidies would add to the difficulties of the people and said targeted subsidies are being increased to benefit the deserving people. For this purpose, allocations for Benazir Income Support Programmes, which were 35 billion rupees this year, have been increased to 50 billion rupees. Subsidies through Baitul Maal and Micro-Finance schemes would also be increased for the benefit of the people.

He said that the power sector is become burden on national resources as the government has already paid one trillion rupees for sector debt but it is still going to up. He said that the subsidy on power allocated less than outgoing fiscal year as the government is hopeful from the result of restructuring of the power distribution companies.

Asked about agricultural income tax, the Minister said a national consensus is emerging that all incomes whether from industry, services or agriculture should be taxed. He said there are issues concerning collection and rates of the tax and, agriculture being domain of the provinces under the Constitution, federating units would sort out these things. He said agricultural income tax is already in vogue in the provinces but its performance is not satisfactory.