The federal PSDP budget is set at Rs 727 billion, down 19 percent from last year.
Finance Minister Miftah Ismail presented the budget for fiscal year 2022-23 (FY23) at the National Assembly on Friday.
This year’s budget session was less chaotic than the last few presentations by the PTI-led government, as there has been no opposition in the House of Representatives since PTI members submitted their resignations.
Ismail began his speech by saying that the policies of the previous PTI government had damaged the economy and damaged people’s lives.
“An inexperienced team put the country into a crisis,” the finance minister said. “Diverse people come up with budgets every year, and various policies are hurting investor sentiment,” the finance minister said. . of time.
Shortly after the budget was submitted in the House of Representatives, Prime Minister Shebaz Sharif tweeted to reassure the public that the government was prepared to make tough decisions to correct “years of poor economic management.”
“This is a difficult time for us due to poor economic management in recent years. With this budget, our government will get out of this challenge by making difficult decisions while minimizing it. [the] Impact on the weak spot [the] population,” he said.
Key Budget Proposals
- There is no tax on salaries of up to Rs100,000 per month. Previously, the minimum taxable salary was Rs50,000/month.
- Raise the minimum tax rate for small businesses from 4 million rupees to 6 million rupees
- 15% increase in civil servant salaries
- Sales tax exemption for solar panel import and distribution
- Withholding tax will be charged for overseas remittance by credit card, debit card, or prepaid card.
- Advance payment tax is increased for vehicles over 1,600cc.
- Complete duty exemption for pharmaceutical ingredients
- 51 billion rupees proposed for education projects
- 24 billion rupees in health sector
- People with an annual income of 300 million rupees or more are subject to an additional 2% tax.
- Prepaid 2pc tax on the value of high value-added hybrid and electric vehicles.
Budget spending this year was Rs 9,502 billion, an increase of nearly Rs 1 trillion over last year.
The government set a total current expenditure of 8,694 trillion rupees in FY23, an increase of 15.5% from last year’s budget.
Defense spending was set at Rs 1.523 trillion, accounting for 17.5% of total current expenditure, an increase of 11.16% from last year..
interest payment; or Debt repayment in FY23 budget increased by 29.1% from last year to Rs 3.95 trillion, the largest single expenditure by the government, accounting for 45.4% of total current expenditure..
net federal income
The total revenue budgeted for fiscal year 23 is Rs 9.4 trillion. Net income after subtracting 4.1 trillion rupees transferred to provinces as part of the National Finance Commission (NFC) award was 4.904 trillion rupees, up 9% from last year.
FBR tax targets
The government has set a tax collection target for FBR (Federal Revenue and Revenue Service) at Rs 7.4 trillion in FY23, an increase of 20.1% from Rs 5.829 trillion last year.
The fiscal deficit, or total budget deficit, which is the difference between the government’s total expenditure and revenue, is calculated as follows: ,502 billion
For FY23, the total deficit was set at Rs 3.798 trillion, or 4.9% of GDP. Last year, the budget deficit was set at 6.3% of GDP.
The total allocation to the Public Sector Development Program (PSDP) was set at Rs 2.158 trillion in FY23, an increase of just 1% from Rs 2.135 trillion last year.
Accordingly, the federal PSDP was Rs 727 billion, a decrease of 19.2% from last year’s budget of Rs 900 billion.
The provincial PSDP for FY23 was Rs 1.43 trillion, an increase of 16% from last year’s budget of Rs 1.235 trillion.
“The problem with our economy is that our economy is growing at 3 to 4 percent, but when it rises to 5 to 6 percent, our current account deficit is out of control. This is because we prioritize the elite to increase income. to promote it,” the minister said.
He said the government must move toward “sustainable growth,” adding that it has set a growth target for next year at 5%.
“The government knows that the working class is struggling with high inflation and we are doing everything we can to bring it down,” Ismail said, adding that the government has set an inflation target of 11.5% for next year.
tax on real estate
During his speech, the finance minister pointed out that most of the wealthy’s wealth is stored in real estate.
Ismail calls this a “double-edged sword” and has announced that anyone who owns two or more properties worth Rs25m or more in Pakistan is deemed to have received a rent equal to 5% of the fair market value of that property. They must pay 1pc in tax on this deemed rental income. However, one household per person is exempt from this tax.
The government has also proposed a 15% tax on gains on real estate transfers if the holding period is less than one year. The tax is reduced by 2.5% each subsequent year, eventually reaching zero when the holding period reaches six years.
It has been proposed that the upfront tax rate on the sale of property by a declarant be raised from 1pc to 2pc now and 5pc for non-declarant.
Under the budget proposal, the government said citizens of countries who are not taxpayer residents of other countries would be treated as taxpayers in Pakistan. He said the current system is being “misused by the rich” and that the resident standards for taxation are being revised.
Header image: Treasury Secretary Miftah Ismail presenting the budget to Parliament. — PID