Islamabad:
The government can establish a new fiscal objective in more than RS14.3 billion, which is higher in RS2 billion during the objective reviewed down this fiscal year and may require at least RS500 billion in additional measures to achieve it.
After resolving the new fiscal target figure for fiscal year 2025-26, the Government has begun exercise to list measures that would have to demonstrate that the objective of RS14,307 billion is realistic and attainable.
The Minister of Finance, Muhammad Aurengzeb, is expected to pronounce his second budget speech on June 2 or 3 before EID holidays.
The objective of RS14,307 billion is equal to 11% of the projected size of the next fiscal year of the economy.
A senior FBR official told Express PAkGazette that the absolute fiscal objective number can change, depending on the size of the economy, but 11% of the GDP figure would be the goal.
Development occurred as the deadline to inform companies about accepting or rejecting their budget proposals has expired. The Government had invited proposals from several cameras and commercial associations in January with the promise to respond at the end of April about how many of them can be accepted realistically.
When it was contacted, the Minister of Finance, Muhammad Aurengzeb, said that the review of the budget proposals was underway since these proposals are still arriving.
The RS14,307 billion for fiscal year 2025-26, as of July, is tentative and is subject to the support of the International Monetary Fund that Visit Pakistan from May 14 to examine the budget.
The objective of RS14.3 billion is 16% or RS2 billion more than the descending objective of RS12.3 billion RS12.3 of this year, government sources said. It is also higher than the figure that the FBR launched to the Minister of Finance, which was significantly lower than the objective that the Government wants to establish for fiscal machinery.
For this fiscal year, the Government had established the original fiscal objective of almost RS13 billion or 10.6% of GDP. Due to lower inflation and lower economic growth, the objective has been reviewed at RS12.3 billion, but is still constant 10.6% of GDP.
The sources said that the authorities will have to take around RS500 billion for the value of new fiscal measures so that the next objective is realistic and to put an end to any uncertainty associated with it. These measures would come more than RS1.3 billion additional taxes, which were imposed on people, mainly on the wage class, to achieve this year’s goal.
Despite putting an extraordinary burden for people, the FBR has faced so far the fiscal deficit of RS830 billion, which stresses that the capacity of the economy to pay more has eroded without expanding the base. What is equal to a mini budget, the government has already increased the oil collection rate in RS18 to RS78 per liter with a different pretext to compensate for the impact of the FBR deficit.
FBR president, rashid langial, said Wednesday that next year’s budget would be difficult in terms of achieving fiscal objectives, warning people about the next fiscal measures.
OICCI budget proposals
Meanwhile, Finance Minister Muhammad Aurengzeb, held a meeting with the Chamber of Commerce and Industry of Investors abroad (OICCI) to discuss their budget proposals. The OICCI was not informed if any of its proposals would be accepted.
The association has suggested the government to withdraw the 5,000 currency notes to discourage the cash economy. The size of the informal economy is estimated at least 40% of the formal economy, but the government does not seem serious about taking energetic measures against the informal economy.
The OICCI also recommended to exempt chemical dealers from the 2% tax withholding charged to merchants.
In an important proposal, the Association has also demanded to abolish the 10% surcharge in people who earn RS10 million or more in taxpayers who comply, since it imposes an unfair load in regular filing archivators.
The highly marginalized salaried class of Pakistan paid RS391 billion in taxes in just ten months. The wage class paid 10% of the total income tax paid throughout the Pakistan compared to 0.6% paid by blue -eyed merchants.
The OICCI has recommended that the Government exempt until the monthly income of RS100,000 taxes, which justifies the demand given the purchasing power of the people of the people. It has suggested that to retain the number of filingers, the Government can impose RS1,000 tokens taxes for income exceeding RS600,000 to RS1.2 million annual revenues.
It has also demanded tax credit for deductible subsidies for housing, education and medical expenses loans. The OICCI has recommended limiting taxes of the company’s contributions to the Background of Provident to 10%, eliminating the limit of RS150,000.
He has also sought a specific exemption from the capital value tax of% in foreign assets for the return of expatriate Pakistani and foreign citizens who become resident employees.
In an important proposal, the OICCI has demanded gradually reducing the corporate income tax rate from 29% to 25% through an annual reduction of 1% to align with other emerging economies. He has sought to abolish super taxes gradually for three years, in the first phase cutting from 10% to 6% from July.
The OICCI has demanded to abolish 15% of the Income Tax on Dividend Payment, which takes the 64% rate for some companies.
OICCI has also required to reduce 17%sales tax, which the government cannot accept due to its great dent in the budget.
The association has asked to declare oil derived products as taxable supplies that allow input tax settings, but the FBR showed reluctance due to the IMF program.
It also rightly demanded to reduce the 5% packaged milk tax to promote growth in the dairy sector, improving nutrition and affordability for the general public. In another important proposal, the OICCI has asked to restore the zero qualification of the sales tax on local supplies under the export facilitation schemes (EFS) by withdrawing 18% from GST. The IMF is not in favor of withdrawing this tax.
The OICCI has asked to reduce federal taxes in airy waters at 18% and 15% juices, which has negatively affected the growth of these companies.
