The Punjab government has announced a budget outlay of Rs1,681 billion which is 16 percent higher than revised outlay of outgoing year. The highlight of the budget is a 30 percent increase in the development budget to reach Rs550 billion in FY17; and almost two fifth of it is on construction and transport.
For a long time (eight years to be specific), Pakistan has waited to step up on the MSCI after being pushed down a rung in 2008. MSCI Inc. - a leading provider of global equity indexes - in its annual review announced that MSCI Pakistan Index will be reclassified to Emerging Markets status in May 2017. Recall that last year Pakistan was put on the watch list for a possible reclassification to Emerging Market Index. The country was part of the MSCI Emerging Market Index during 1994-2008, but was subsequently pulled out in 2008 owing to the stock market crisis that led to the implementation of floor rule. However, Pakistan was made part of the Frontier Markets Index in May 2009 and it has remained as such since then.
The government has finally set its sight on taxing the real estate sector. However, the move is mostly aimed at collecting additional revenues than addressing the issue of prevailing informality in the sector, whereas the tax moves themselves are controversial and reek of increasing reliance on indirect mode of direct taxation.
We all know that the poor cotton crop this past year had an adverse impact on agriculture; cotton production in the country was short by almost 33 percent year-on-year (not 27 percent as the Finance Ministry would have you believe - a topic of discussion for another time), putting a huge dent on the economy. This column has already discussed the issues behind the lower cotton crop at length. Todays article looks at the challenges that are already facing us in the current seasons cotton crop.
This column last week talked about the increasing gap between indirect and direct taxes (a ratio of 6 to 4) and governments reliance on withholding taxes that are part of income taxes but indirect in nature. And these particular taxes are only increasing. Meanwhile, the incidence of the narrow tax base is tilted on telecom, banking and power distribution sectors whereas large contributors to GDP mainly agriculture, wholesale, retail and real estate pay negligible taxes.
The finance czar of Sindh, while presenting the provincial budget of 2016-17 season made two critical statements. Firstly, he took the lead from the leader of the opposition and strongly criticised the federal government rightfully for its unwillingness in announcing the 9th NFC Award.
Cement and steel that make up 40 percent of the total cost of construction material will both see an increase in prices after the budget announced last Friday. The federal budget allocated a FED of Rs.1/kg on a 50-kg cement bag that was previously five percent on the retail price. The current retail price of cement ranges between Rs480 to Rs530 per bag in the domestic market which is already significantly higher than cement prices in Iran, India or the UAE.