ISLAMABAD: Finance Minister Asad Umar on Wednesday presented the third finance bill for the current fiscal year in the National Assembly of Pakistan, claiming it would boost investment, manufacturing and exports, and facilitate agricultural financing to promote economic activities in the country.
As opposition lawmakers chanted slogans against the government, the minister said he was presenting an “economic reforms package” to address the needs of the people.
“We are committed to helping deprived segment of the society and it is our constitutional responsibility to bridge the gap between the rich and the poor,” he said.
The minister also announced that he would present the “Medium Term Economic Framework” in Parliament next week to boost investment, manufacturing and agricultural produce in the country.
Umar said his government had identified four variables to fix Pakistan’s ailing economy. These included: balancing government’s revenues and expenses; increasing exports that recently plummeted from 14 percent of the GDP to 7 percent; encouraging foreign direct investment; and boosting national savings from 10.4 percent which, he added, were the lowest in the world.
To achieve all these targets, he announced to slash tax on small and medium enterprises and agricultural loans from 39 percent to 20 percent, abolish withholding tax on banking transactions for tax filers, and remove import duty on newsprint.
He said that duty on diesel engines for agricultural purposes was also decreased to five percent. Other than that, abolition of Gas Infrastructure Development Cess on fertilizers would help reduce prices of urea for 200 rupees per bag.
After approval of the Finance Supplementary (second amendment) Bill 2019, non-tax filers will be able to purchase cars up to 1300cc, though the tax will be increased for them.
Tax would also be increased on imported vehicles above 1800cc, he said, adding that tax for low priced imported mobile phones would be decreased but remain the same for expensive imported phones.
To promote low-income housing, the minister announced a revolving fund of five billion rupees for interest free loans, while tax on wedding halls up to 500 square feet would be decreased from 20,000 rupees to 5,000 rupees.
The government has also announced a five-year tax exemption on manufacturing of all products related to renewable energy, including solar panels and wind turbines.
The finance minister announced to abolish super tax for non-banking companies and on bids for sports franchises until profitability, while withholding tax on trading in the stock exchange, he said, had also been abolished.
To encourage exports, the minister said that a scheme of promissory notes was being introduced for businessmen and exporters that would help them get concessionary loans from commercial banks.
Criticizing the opposition earlier, the minister accused them of leaving the country indebted with 2,500 billion rupees to 3,000 billion rupees in loans that were not shown in the books.
However, members of the opposition parties were not impressed by the new finance bill.
“There is nothing in this budget that will generate economic activity in the country,” Pakistan Muslim League-Nawaz leader, Mohammad Zubair, told Arab News. “The government has announced tax reductions in different fields, but it is yet to be seen how this will affect revenue collection.”
Pakistan Peoples Party’s former finance minister, Saleem Mandviwala, said the budget was just a “plethora of numbers” and there was nothing in it for the common man.
“The government just wanted to show its performance by bringing the mini-budget. But it has badly failed to address the genuine issues of people,” he said while talking to Arab News.
Senior economist, Dr. Athar Ahmad, termed the budget “a step in the right direction,” saying that all these measures were needed to fix the economy.
However, he pointed out that the finance minister had failed to introduce any incentives for booming IT industry and measures to increase tax revenue. “The actual test of the government now is to ensure strict implementation of all the announced measures to achieve the targets,” said Dr. Ahmad.