- Business Recorder sums up some of the proposals that have been under consideration by the govt
The coalition government, led by Pakistan Muslim League-Nawaz (PML-N), is set to announce the budget, which is largely seen as its last chance to ‘win over’ the political capital it lost in the last 14 months.
PML-N’s senior leader, close aide of party supremo Nawaz Sharif and current Finance Minister Ishaq Dar will have to delicately deal with expectations of the masses, as elections are expected this year, while keeping in mind the International Monetary Fund (IMF).
Business Recorder looks at what the markets and public will be interested in:
This is probably the most vital announcement for the salaried income group.
In the last year of its previous tenure (2013-2018), the PML-N announced lowering income taxes. But back then, the IMF programme was not hanging over its head.
This time, the story is different.
Experts have said the government, which has revised the revenue target for the Federal Board of Revenue (FBR) in line with the IMF expectations, is likely to focus on increasing indirect taxation.
We will have to wait and watch.
Tax on corporate reserves
The Reform and Revenue Mobilisation Commission (RRMC) proposed an advance tax on the undistributed reserves of both listed and unlisted companies. This was met with fierce opposition.
The corporate sector vehemently voiced its disapproval of the said proposal, and reports suggested it may not be implemented.
But the government, which is running low on revenue, may add burden on the already taxed sector.
Tax on exporters not bringing forex within a specified time period
The RRMC also recommended the Ministry of Finance impose a tax on exporters that are not bringing foreign currency within a specified time period.
The revenue impact is estimated to be positive for the government.
Textile sector eyes imposition of RCET
Meanwhile, the All Pakistan Textile Mills Association (APTMA) urged the government to reinstate the Regional Competitive Energy Tariffs (RCET) for gas at a rate of $9/MMBtu and for electricity at 9 cents/kWh in the upcoming budget.
The textile body also warned textile exports could fall further by $5 billion in the absence of competitive energy tariff.
Pakistan needs export revenue and the textile sector could be given some relief. However, there isn’t a lot of fiscal space in the government’s kitty to offer subsidies.
Last year, total tax exemptions, concessions and special tax treatments to various businesses, sectors/ industries, lobbies/groups and investors cost the government Rs2,239.6 billion in 2022-23 against Rs1,757.035 billion during the fiscal year 2021-22, an increase of Rs482 billion.
Cashless payments at petrol stations
In a bid to encourage cashless banking transactions, the RRMC also recommended that petrol stations across the country should not accept cash payments for fuel purchases in the coming budget (2023-24).
It needs to be seen whether the said proposal is given a green signal by the government.
Govt employees salaries, minimum wage
There were questions from journalists when Dar unveiled the Economic Survey 2022-23 on Thursday if the government was contemplating increasing its employees’ salaries and the minimum wage. Dar said the proposals were under consideration.
Super Tax, PDL
There was also market talk on the government considering increasing the Super Tax on corporates and petroleum development levy from the current upper limit of Rs50 per litre.