Sans opposition, federal budget worth Rs14.46tr 2023-24 presented

ISLAMABAD: The coalition government, unveiled second budget for the fiscal year 2023-24 earlier today. Finance Minister Ishaq Dar laid the budget documents in both the houses of the parliament simultaneously.

The absence of hardcore opposition in the National Assembly led to smooth sailing of the budget in the lower house, however, Dar had to face hue and cry in the upper house of the parliament the Senate as the opposition staged walk out of the House to record protest.

In his speech at the National Assembly the Finance Minister held the previous government responsible for the the economic ills in the country.

Earlier, the federal cabinet headed by Prime Minister Shahbaz Sharif also granted approval to the budgetary proposals for the upcoming fiscal year.

The federal budget 2023-24 comprises total outlay of PKR14460b rupees with a focus on economic stability, sustainable and inclusive growth as well as curbing inflationary pressures aiming to provide relief for various segments of society including the salaried class. The budget also envisages special initiatives for the uplift of agriculture, industries, and IT sectors.

According to Dar, a modest growth target of 3.5 percent had been set for the next fiscal year, calling it a ‘responsible budget’. “The country will soon go to the general elections but instead of presenting an election budget we have chosen elements of real economy after hectic consultations because of which the country will move forward on the path of progress in the minimum time” he maintained.

“Pakistani economy’s second major problem is the current account deficit (CAD),” he said while adding that it has risen to USD17.5b during fiscal year 2021-22. The minister mentioned that due to the prudent decisions of the incumbent government — majorly the import curbs — the deficit has been reduced by 77 percent to USD4b.

The government has proposed an allocation of PKR1,150b (including PKR200b from Public Private Partnership mode), and for the provincial programme, PKR1,559b have been proposed.

He informed that no new tax is being imposed this year and efforts were underway to increase employment opportunities and introduce policies that promote ease of doing business. The finance minister said PKR7,200b are likely to be collected in tax revenue in which provivial shares would stand at PKR4,129b in the next fiscal year. Finance Minister said that FBR was aiming to collect PKR1,618b from non-tax revenue, and federal tax collection will be PKR4,689b. The total expenditure meanwhile is estimated at PKR11,090b. “Industries and exports should be encouraged to play their part in increasing the country’s foreign exchange reserves. Imposing taxes on the rich is the leading principle of the government’s taxation policy, and the tax was imposed on high-earning individuals,” he said.

He said that minimum tax on all Listed Companies is being reduced from 1.25 percent to 1 percent while, to facilitate the textile industry, five percent regulatory duty is also being abolished on Synthetic Filament Yarn which is not manufactured in the country. Custom duty on Pet Scrap is also being decreased from twenty percent to eleven percent.

The government has also abolished ‘Final Tax’ for purchasing Immovable Property under Foreign Remittance by Overseas Pakistanis while providing them with fast track immigration at all airports. Additionally, a special scheme will be launched for giving major rewards to Remittance Cards Holder through a transparent draw.

Ishaq Dar said that ten percent regulatory duty on the import of second hand garments is also being abolished. Similarly, a new scheme of Micro Deposits for low income people is also being launched under National Savings from July 2023.

In a bid to promote local manufacturing of solar panels and allied equipment, the government is exempting raw material used to manufacture solar panels, inverters and batteries from custom duty.

The limit of agri-credit is being enhanced to PKR2,250b as compared to PKR1,800b of the outgoing fiscal year while PKR30b have been earmarked for shifting fifty thousand agriculture tube wells to solar energy. All taxes and duties on import of quality seeds are being abolished and custom duty on saplings is being waived off per the minister. In addition to that, combined harvesters, seeders, rice planters and dryers are also being exempted of all duties and taxes in order to promote their use in the field.

The Finance Minister said that small farmers will be provided with loans on low markup with the partnership of provincial governments. For this purpose, a substantial amount of PKR10b to increase agriculture production.

Under Prime Minister’s Youth Business and Agriculture Loan Scheme, small and medium loans will be issued on easy installments. For this purpose, PKR10b have been earmarked for mark-up subsidy for the next fiscal year. PKR6b has been set aside for subsidy on imported urea fertilizer.

The government has also increased the turnover threshold of Small and Medium Industries from PKR250m to PKR800m by increasing the tax concessions of the SMEs. SMEs Assan Finance Scheme has also been restored while establishing a Crediting Rating Agency for the SMEs has also been proposed in the federal budget.

For Industry and Export sectors, the Finance Minister said that an export council of Pakistan is being constituted under the supervision of Prime Minister Sharif to take ‘important decisions with regards to exports of the country’.

The Finance Minister said concessional 0.25 percent income tax is in place for promotion of IT exports. He said this facility will be continued till 30th June 2026.

He announced the establishment of a Venture Capital Fund of five billion rupees for the IT sector. Sales tax on IT services within the precincts of ICT is being reduced to five percent from 15 percent. He said banks will be able to avail the concessional tax of 20 percent for the encouragement of loans in the IT sector. He said that fifty thousand IT graduates will be provided with professional training during the next fiscal year.

The federal government also announced the launch of Bonded Bulk Storage Policy for Petroleum products to control shortage in their supply chain. Under this scheme, a Foreign Supplier will import crude oil and POL products through its own financial sources and store them in Bonded Bulk Storage in Pakistan. Oil marketing company and refineries will eventually be allowed to purchase these products.

Turning to the education sector, the Finance Minister said that PKR65b had been earmarked for the current expenditures of Higher Education Commission and PKR70b for its development expenditure respectively.

The Finance Minister announced the establishment of Pakistan Endowment Fund for which PKR5b have been earmarked. He said this fund will provide merit based scholarships to the students of high schools and colleges. Meanwhile, PKR10b have been allocated to continue the laptop scheme in the next fiscal year.

Describing sports as an important component of education, he said PKR5b are being set aside for promotion of professional sports in schools and colleges. The Finance Minister said PKR5b have also been earmarked for women empowerment. This included skill development, easy loans for businesses and training programs. He said concession in taxes will also be given to women entrepreneurs.