Pakistan’s Finance Minister Abdul Hafeez Shaikh on Friday announced the budget for fiscal 2012-13 with a total outlay of Rs2.96 trillion estimating a deficit of Rs1.185 trillion.
This was the fifth budget of the present coalition government led by the Pakistan People’s Party (PPP), a record of sort in the country’s troubled political history and reflected several pro-people measures ahead of election expected to be held next year.
The budget envisaged development programme (PSDP) of Rs360 billion, and a revenue target of Rs2,504 billion. The budget expenditure has been raised by 15.8 per cent for 2012-13 compared to last year. Inflation target has been set at 9.5 per cent against current 11.6 per cent. Total resources stand at Rs2.719 trillion.
Defence allocation has been increased by Rs20 billion to Rs545.38 billion with the army getting the major chunk of Rs264 billion for the defence forces. Shaikh described the increase as “modest” keeping in mind the inflation rate.
No new taxes have been imposed but some have been rationalised to raise revenue. Minimum tax limit has been raised from Rs350,000 to Rs400,000. Rs70 billion have been provided for the Benazir Income Support Programme to help millions of poor families.
Sales tax has been made uniform at 16 per cent and reduced on a number of items of common use.
A 20% per cent ad hoc relief allowance has been provided in salaries and pension of government employee. A tax payer honour card has been introduced, which would entitle the people to certain facilities. Turnover tax rate is being cut to a half. The minister said the government wants to gradually eliminate the presumptive tax system in three years. Five per cent tax on importers is being reduced to three per cent, while one per cent tax on exporters will be reduced to 0.5 per cent. The withholding tax exemption limit of Rs25,000 on withdrawal of cash from banks is being raised to 50,000. Different rates of general sales tax to be done away with the imposition of a uniform 16 per cent sales tax.
Sales on locally produced paper and canola ghee being declared zero rated. Sales tax on tea proposed to be reduced to five per cent from 16 per cent.
Customs duty highest rate instead of 35 per cent reduced to 30 per cent. Besides customs duty on pencil, copy ink etc. is being abolished. Federal excise duty on cement is being reduced by Rs100 per tonne. Custom duty on scrap used as fuel in cement factory will be reduced to 10 per cent from 20. Custom duty on 94 items of pharmaceutical raw materials is being abolished.