Pak Budget 2004-2005 announced

Society Pakistan & World Affairs
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I really like the sound of this. The government seems to be making the right kind of tax cuts to enable both local businesses to grow and to attract foreign direct investment. High taxes almost always bring short-term increased revenue and the expense for long-term growth, as well as giving more pilfering opportunities to corrupt officials. Cutting taxes as the Jamali administration is proposing should help avoid both these problems.

The 21% hike in the Defence budget raised my eyebrows and worried me, but unfortunately this is required as India’s offensive capability is escalating very quickly and Pakistan needs serious investments in its armed forces to avoid being completely outclassed. The government must hurry and work to bring peace with India so Pakistan is no longer forced to continue crippling itself with the defence burden.

http://www.dawn.com/2004/06/13/top1.htm

**Rs903bn budget for 2004-05: Stress on growth and investment -•One million jobs to be created •Incentives to boost agriculture •Power tariff cut •Sales tax on cotton seed oil •Duty, ST relief for industry **

ISLAMABAD, June 12: Finance Minister Shaukat Aziz presented the federal budget 2004-05 in the National Assembly on Saturday , envisaging a total outlay of Rs903 billion proposed to be met with receipts of Rs622 billion and showing a gap of about Rs280 billion to be filled by borrowing. The overall budgetary deficit was kept within the target of 4 per cent of GDP.

Describing the budget as ‘employment generating’ and ‘growth- and investment-oriented,’ the finance minister said the budget carried no new taxes. He said it offered measures to provide relief to the common man and reduce the burden of existing taxes on the agriculture and industrial sectors.

“The budget has the distinction of delivering economic sovereignty to our country as we are saying good-bye to the IMF,” said Mr Aziz.

The defence budget has been projected at Rs194 billion, which is over 21pc (Rs34 billion) higher than the current year’s original allocation of Rs160 billion and 7.8pc higher than the revised estimate of Rs181 billion.

The budget 2004-05 whose size is larger than the current one by only 4pc, proposes Rs202 billion for the public sector development programme (PSDP), higher by 26pc and 31pc than the current year’s original and revised allocations, respectively.

The poverty-related expenditures are estimated to go up to Rs277 billion, representing an increase of 16pc over the current year’s Rs239 billion.

The total tax revenue (CBR) target for the next fiscal has been projected at Rs580 billion against the current year’s revised estimates of Rs510 billion. The levies and surcharges on account of oil and gas have been projected at Rs63 billion against the Rs61 billion revised estimates for the current year.

Non-tax revenue has been budgeted at Rs141.5 billion for the next year compared with the revised estimates of Rs181 billion for the outgoing year.

According to the minister, the budget 2004-05 gives a clear policy direction to pave the way for consolidation of the reforms process, including the introduction of second generation reforms.

These are the main features of the budget 2004-05: an interim relief for government employees and pensioners, transformation of the national savings centres into a commercial corporation, reduction in electricity tariff, cutback in duties on capital goods and raw materials for the industrial sector, and elimination or reduction in duties and taxes on building materials and machinery for the construction industry.

The deficit would be met through external resources of Rs156 billion and bank borrowing of Rs45 billion besides privatization proceeds worth Rs15 billion.

The resource availability during 2004-05 has been estimated at Rs842.6 billion against Rs767.3 billion in the budget estimates of 2003-04. Net revenue receipts for next year have been estimated at Rs557.2 billion, indicating an increase of 8.5pc over the estimates of 2003-04.

The capital receipts (net) for 2004-05 have been estimated at Rs64.4 billion against the budget estimates of Rs36.7 billion in the outgoing financial year. External receipts in 2004-05 are estimated at Rs156.4 billion, showing an increase of 8pc over the revised estimates of 2003-04.

The current expenditure for the next year has been projected at Rs700.7 billion, showing a decline of Rs13 billion from revised estimates of the current year. The share of current expenditure in the total outlay for 2004-05 is 77.62pc compared to 82.2pc in revised estimates of 2003-04.

The expenditure on debt, both domestic and foreign, amortization is estimated at Rs265 billion.

The provincial share in the federal receipts is estimated at Rs239.2 billion during 2004-05, higher by 13pc than the revised estimates for 2003-04.

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PAY & PENSION: An ad hoc 15pc increase in the salaries has been given to the government employees that will be adjustable in accordance with the recommendations of a new pay and pension committee.

The pensioners, who retired before 1994, have been given a 16pc raise and those who retired after 1994 will get an 8pc increase in their pensions.

ELECTRICITY TARIFF: The minister announced a reduction in the electricity tariff by 10 paisa per unit for domestic consumers, 25 paisa for commercial consumers and up to 58 paisa per unit for industrial consumers. He said the KESC was also making 'suitable' reduction in tariff.

It has been decided that the fixed charges for tubewells in Punjab and Sindh will be equalized with those applicable to Balochistan and the NWFP.

PACKAGE FOR INDUSTRY: Major steps for the industry include directives to provincial governments to liberalize the working of the industrial sector by removing the intervention of a number of departments such as inspectors of shops, labour and electricity.

Visits to industrial units will be pre-announced. Significant relief is being provided to the industrial sector in the administration of sales tax, which will reduce the cost of production and enable the factories to provide cheaper products to consumers.

Besides, the minister said, sales taxes were being rationalized, the net of excise duties was being curtailed and the overall tax regime was being made 'taxpayer friendly' through a number of facilitation arrangements.

He said that in order to meet the challenges of the new WTO regime, which would come into effect in January 2005, the government had allowed liberal import of machinery and given accelerated depreciation allowance. These measures would significantly improve the global competitiveness of the country's industry by reducing the cost of doing business in Pakistan, he added.

To assist the industries to meet the international environmental standards, effluent treatment plants would be established in all the major industrial estates for which funding support would be arranged through a government guaranteed programme.

HOUSING AND CONSTRUCTION: Mr Aziz said the government had made additional measures to improve the profitability of investment in the housing and construction sector. These include elimination of excise duty on paints, reduction in the duties on a number of building materials, including steel, cutback in the duty on imported machinery together with exemption from sales tax and withholding income tax.

LAND TITLE PROBLEMS: He said that to remove uncertainties of legal titles from the real estate markets, all records of building authorities and societies would be computerized and public disclosure would be made of the ownership of properties so that consumers could enter into real estate transactions without fear of misrepresentation and fraud.

PAKISTAN SAVINGS: The minister announced the establishment of a corporation 'Pakistan Savings' to replace the National Saving Centres. Its details would be announced later.

The new entity will diversify its business by offering mutual funds of different kinds, which will be managed by professional assets management companies.

AGRICULTURE: The budget proposed to exempt sales tax on import of tractors, bulldozers, combined harvesters and on a number of other agricultural implements.

A relief of Rs100 per bag in the price of phosphatic fertilizers is being proposed. All imported machinery not manufactured locally has been exempted from customs duty, sales tax and withholding tax.

Duty reduction on import of agricultural tractors in CBU condition, not manufactured locally, has been proposed from 30pc to 10pc. A reduction of withholding tax from 6pc to 2pc has also been proposed to encourage productivity in the agricultural sector.

In addition, a reduction in withholding tax on import of certain types of fertilizers from 6pc to 1pc has also been proposed to reduce the cost of fertilizer inputs.

All agricultural machinery manufactured locally has also been exempted from sales tax. The application of 10pc excise duty on imports is being provided as protection to local manufacturers.

SALES TAX: A single sales tax rate of 15pc has been introduced and all other slabs of 18pc, 20pc and 23pc have been done away with.

In order to remove a major trade distorting measure, the budget proposed to abolish further tax as it was an important factor in giving rise to 'flying invoices' which subsequently contributed to inadmissible refund payments. The step would encourage growth in textile, steel, chemical, cement, beverages and a wide range of consumer items which would be freed from this additional burden.

Sales tax on ginned cotton, hides and skins and raw wool has been zero-rated.

INCOME TAX: Considering the rate of inflation and in order to provide relief to the lower income group, it has been proposed to increase the income tax limit to Rs100,000.

For senior citizens, the taxable limit of Rs200,000 has been increased to Rs300,000.

CUSTOMS DUTY: To provide adequate incentives to local industrial undertakings, it has been proposed to substantially reduce customs duty on raw materials used by industrial and agriculture sectors.

To create a fair competition for the local auto industry, it has been proposed to rationalize customs duty on the commercial import of CBU cars. Besides, the concessions granted to the vendor industry in the auto sector, have also been proposed to be rationalized whereby raw materials, sub-components and intermediaries, sub-assemblies and assemblies and components would be subjected to 5pc, 10pc, 20pc and 35pc customs duty, respectively.

CENTRAL EXCISE: In order to encourage housing and construction industry, the government proposed to remove the 10pc excise duty presently applicable, aimed at reducing the cost of construction, particularly for low income groups.

To encourage agro-based industry and to allow cheaper access of healthy and hygienic drinks to people, the government proposed to remove excise duty applicable at the rate of 10pc on fruit juices, syrups and squashes. This measure would increase the demand for fruits and lead to increased production of such agro- based products.

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Great, Thankyou for the post! :)

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Good news for Pakistan,,,

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Very pro business budget, I see next to nothing for the average person in Pakistan. The increase in pensions and salary will effect only a fraction of people.

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so let me see.. total budget increases by 5% and Army gets a 21% increase in theirs.. that’s like 16% more from what was allocated last year on Public.. Good job .. lagay raho :k:

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well
by reducing the price of cars and mobiles
ghareeb aadmi ka to mazaq hi uraya gaya hay na
and the budget also says k from now on TV license fee will be included in the electricity bill [30 Rs.]
ppl who dont keep a TV in their home , unn ka kiya kasoor hay why shud they pay
army main 50,000 ki kami ki hay
and then the defence budget has been increased !!