- Focus to stay on protecting the most vulnerable and increasing dollar revenue
- Addressing post-budget press conference, finance minister says measures aimed at broadening tax base
Finance Minister Shaukat Tarin has said that an additional tax of Rs500 billion will be collected for the next financial year, as the government seeks to achieve sustainable growth.
Sitting alongside the government’s economic team including Minister for Economic Affairs Khusro Bakhtyar and Commerce Adviser Razak Dawood, Tarin addressed the post budget conference on Saturday. "We have presented a total growth budget and our challenge is to achieve sustainable growth,” said Tarin.
The target is to take the growth rate to 20% in 8 to 10 years, said Tarin.
Under the budget unveiled on Friday, the government has taken measures of around Rs506 billion, including taxation measures of Rs264 billion and enforcement measures of Rs242 billion to meet the annual target of Rs5,829 billion.
The measures include 17% sales tax on crude oil, Federal Excise Duty (FED) on phone calls/SMS messages/internet data usage, 17% sales tax on silver/gold jewellery, and 7.5% withholding tax on monthly electricity bill of above Rs25,000 of domestic users not appearing on the Active Taxpayers' List.
Addressing the press conference, Tarin said that the country needs to earn dollars, which can only be achieved by increasing exports.
The finance minister said the government intends to broaden its tax base as well. “We are in dialogue with the IMF on this issue, as we want to broaden the tax base and not impose further taxes on the taxpayer,” he said.
He said the government has set up a tax collection target of Rs5.8 trillion for the next fiscal year which will be achieved through innovative approach including the use of latest technology.
Targeting the retail sector, he said that large retailers have sales of Rs1,500 billion, and sales tax has to be levied on all big stores. “I have figures from independent sources. Large- and middle-tier retailers have sales of Rs1.5 trillion.”
The finance minister said that consumers will be rewarded if they get a sales receipt. He said such schemes have been successfully implemented in Turkey and other countries.
The ex-banker said that after much deliberation it was understood that the resources to be distributed to the poor are in the banking sector. “The government does not have the fiscal space to disburse Rs 600-700 billion every year,” he said.
The finance minister said that in order to benefit the masses, four million households, to be accessed through the Ehsaas Survey, will be provided with interest-free business and farming loans. Besides, they will be given health cards and one member of each family will be imparted technical training.
Highlighting the measures taken in the Budget 2021-22, Tarin said taxes on the IT sector have been rationalized in order to exploit its full potential.
Tarin said duties have been abolished on almost all the raw materials, which will strengthen the local industries and reduce imports.
Talking about reducing taxes on automobile sector, the finance minister expressed confidence that the prices of cars with engine capacity of up to 850 cc will come down.
The government on Friday announced exemption from FED on motor vehicles up to 850 cc and reduced sales tax from 17% to 12.5% in addition to withdrawing value-added tax (3%) on motor vehicles up to 850 cc.
Tarin said the incentives given to the SMEs will also help achieve higher growth in the industry.
Talking about the power sector, Tarin said the government has increased subsidies to bring efficiency. “DISCOs will be operated through independent boards and they will be privatized, while line losses will be reduced and recoveries will be enhanced.”
Finance minister said that the prime minister and the cabinet had opposed the imposition of tax on mobile calls, internet data and SMS after which all of them would not be taxed.
The Federal Minister said that increase in agricultural production is essential to control prices and the government will introduce integrated systems to protect farmers from exploitation.
Tarin, on Friday, presented a Rs8.495 trillion spending-led outlay for fiscal year 2021-22 designed to achieve six to seven percent GDP growth in the next two to three years.
In his budget speech, he came down hard on the economic policies of the previous governments, and stated that Prime Minister Imran Khan helped the country avert a default and put it back on the path of economic growth.