ISLAMABAD: Finance Minister Abdul Hafeez Sheikh on Friday presented
federal budget 2011-12 of Rs 2767 billion with fiscal deficit of Rs 850
billion or four per cent of the GDP.
Amid hullabaloo of the
PML-N, the Finance Minister told the National Assembly that the
government employees would get a pay raise of 15 per cent while
pensions would also go up by 15 to 20 per cent. This measure would cost
the government Rs 25 billion of the current expenditures. According to
the Finance Minister, the government also proposed a 25 per cent
increase in conveyance allowance of government employees including
armed forces up to pay scale 15. “There is also proposal to increase
all allowances of the government employees up to grade 15,” he added.
The finance minister also announced merger of 50 percent adhoc relief
into pay scales which was granted last year to government employees.
Current
expenditures during the financial year starting July 1, 2011 would
amount to Rs 2315 billion added with development budget of Rs 452
billion would make total federal outlay of Rs 2767 billion.
A
fourth of the total expenditures or Rs 1034 billion would go straight
to the notorious head of debt servicing with Rs 791 billion for
interest payments and Rs 243 billion for repayment of the foreign loan.
Other than debt servicing, largest federal expense is Defense
affairs and service with an allocation of Rs 495 billion while another
sizable amount of Rs 96 billion go to the pensions.
Notwithstanding
criticism on the government for withdrawal of consumer protections,
subsidies, grants, and transfers are estimated to cost the government a
handsome sum of Rs 461 billion. Subsidies would amount to Rs 166
billion while grants and transfers would total at Rs 295 billion.
An
amount of Rs 203 billion has been earmarked as running of the civil
administration with lion’s share going to the security sub-head. In the
federal development budget Public Sector Development Programme
allocations amount to Rs 300 billion while provinces’ share in the PSDP
stands at Rs 420 billion and Rs 10 billion of ERRA to make the total
PSDP at Rs 730 billion. Outside the PSDP, the government has allocated
Rs 152 billion to be spent as development loans and grants to the
provinces in addition to other development expenditures of Rs 97
billion
On the other hand the government has estimated total
federal gross receipts at Rs 2732 billion from where Rs 1203 billion
would be transferred to the provinces leaving net revenue receipts of
Rs 1529 billion. Out of the total tax revenue of Rs 2074 billion the
Federal Board of Revenue (FBR) is been tasked to collect Rs 1952
billion during the year ending June 30, 2012.
To meet the FBR
target that the analysts have termed as ambitious, the Finance Minister
said the government has located 2.3 million people that were not paying
taxes according to their income. A short list of 0.75 would face
immediate independent tax assessments and notices would be sent to them
in next three months, the Finance Minister said during his budget
speech.
“As many as 71000 notices have already been issued and
rest of the 0.75 would receive tax notices within next three months,”
the Minister said adding “moving against first ten thousand people out
of the located tax evaders would generate Rs 3 billion.”
The
Finance Minister claimed that the government had proposed no new tax
except for the withdrawal of all exemptions given on the General Sales
Tax. He also drew the credit for one per cent downward revision in the
17 per cent GST to 16 per cent that was enhanced last year for flood
relief.
The actual deficit during the next financial year would
amount to Rs 975 billion while the government anticipates Rs 125
billion surplus from the provinces to reduce the deficit to Rs 850
billion.
Rather than imposing new taxes the government has
revised the rates downward in case of GST and the Federal Excise Duty.
The Minister told the National Assembly that the government would do
away with all the special excise duties in next couple of years as it
has abolished 395 of them. The government has also increased the
taxable income threshold from Rs 300,000 to Rs 350,000 in order to
provide relief to the low-income people.
Although the
government did not withdraw the capital gain tax on shares, the Finance
Minister claimed that the budget 2011-2012 would attract investments
and ensure capital market development. Online
