According to the budget estimates, the target of tax collection for the next financial year is fixed at Rs4450 billion, with the estimated 15 per cent increase.
During his speech, the minister said: “The GDP growth rate was 5.4pc last year ─ it has now grown to 5.8pc, the highest in 13 years,” he recalled. “Today we are the 24th largest economy in the world.”
“In the last five years, inflation has been kept below 5pc which was up to 12pc when we took over. The budget deficit will remain restricted to 5pc this year,” he said.
The minister said no tax will be imposed on individuals with Rs 1.2 million annual incomes, while those earning between Rs 1.2 million and Rs 2.4 million will pay 5% tax. He went on to say that individuals with annual income of more than Rs 2.4 million will pay 10% tax.
GDP growth rate target
The government has set the GDP growth rate for the upcoming fiscal year at 6.2pc against FY17-18’s target of 6pc. The total tax target is Rs4,888.6bn, of which the FBR taxes comprise Rs4,435bn.
“This target will be achieved through improved tax steps and improved tax administration. The tax base is being expanded and the per cent of tax is being reduced,” the finance minister said.
The non-tax revenue target has been set at Rs1,246bn, according to a copy of the budget 18-19.
The minister said the provincial share in tax revenue will be increased from Rs2,316bn to Rs2,590bn.
10% increase in pensions
The Finance Minister announced 10% adhoc relief allowance to the civil and armed forces employees and 10% increase in pensions across the board.
Minimum pension is being increased from the existing Rs.6000 to Rs.10,000. Similarly, family pension would also increase from Rs.4500 to Rs.7500
Minimum pension of pensioners above 75 years of age would be Rs.15,000.
The defence budget has been set at Rs1,1 trillion from a revised budget estimate of Rs999bn in the previous year ─ 19.4pc of the total budgeted outlay, while the PSDP has been slashed to Rs800bn for FY18-19.
Miftah Ismail said the government intends to restrict the overall fiscal deficit to Rs1890.2bn or 4.9pc of the GDP.
The government estimates forex reserves to come to about $15bn in FY18-19.
The target tax to GDP ratio is 13.8pc, while the target net public debt to GDP ratio 63.2pc, the finance minister announced.
“The objective of the medium term macroeconomic policy, besides improved economic growth, is to correct the balance in the external account,” Ismail said. “The fiscal deficit will be reduced in the next three years and the environment for investment will be improved.”
Allocation for Agricultural sector
Minister bragged during his speech that agricultural production was slated to increase with the government intending to continue implementing an agricultural policy in FY18-19 “until we end the tradition of subsidies”.
Estimated loans to the agriculture sector will increase to Rs1,100bn, he said.
“A second green revolution is needed for advancement in the agriculture sector,” the minister explained. “The next federal government will leave all decisions regarding subsidies to the provincial governments while the federal government’s focus will be on providing a favourable environment for research and development, an increase in production, access to markets and improvement in technology.”
The PM, he said, has approved sales tax of 2pc only on the recommendation of Sikandar Bosan, the food security minister.”
Salient features of the budget 2018-19
- The outlay of the budget is Rs5.9 trillion
- The tax revenue target is Rs4.435 trillion
- Rs1.1 trillion apportioned for defence sector
- The GDP growth rate target is fixed at 6.2 per cent for the next year
- The finance minister estimates forex reserves to come to about $15bn in FY18-19
- Rs688 million rupees will be spent for alleviation of poverty in the coming fiscal year
- Rs800 billions will be given in agricultural loans
- Budgetary allocations for Benazir Income Support Program (BISP) have been increased to 124.7 billion rupees for the next financial year as opposed to previous 121 billion rupees.
- Rs10 billion earmarked for Prime Minister’s Youth Program
- No duty or tax has been imposed on dairy farmers and livestock
- The fiscal deficit is expected to be Rs2,029 billion
- Inflation rate will be contained below 6 percent
- The exports target for next year is set at Rs27.30 billion.
- The defence budget is expected to be Rs1.050 trillion
- Salaries and pensions of employees are increased by 10 per cent.
- Rs25 billion special package for Karachi announced
- A hefty amount of Rs220 billion will be earmarked for subsides on power, textile, water, construction of small dams.
- The federal expenditure has been set at Rs1010 billion while the provincial at Rs1030 billion
- The budget for development projects will be Rs201 billion.
- Rs39 bn allocated for Pakistan Railways
- Rs137 bn allocated for Gwadar infrastructure development Road network, seaport, airport, hospital to be constructed in Gawadar
- The 7th NFC award will have a reduced federal share
The tax target for the Federal Bureau of Revenue (FBR) has been fixed at 4435 billion in the new annual budget.