Islamabad:
The Minister of Finance, Muhammad Aurengzeb, warned Wednesday that the Government can be forced to impose up to RS500 billion for more new taxes if the National Assembly did not allow economic transactions to be prohibited from inelegable people.
The minister also made a paradoxical comment in which he defended the decision to maintain the minimum monthly salary without changes in RS37,000, but advocated an annual increase in the salaries of parliamentarians to adapt to the impact of inflation.
The warning on a mini budget before the approval of the new budget occurred only one day after the finance minister proposed approximately RS432 billion in new taxes, which went to the digital economy, solar panels, cars and intermediary fuel, including the one used in agriculture.
He made the comments during a press conference after the budget where he expanded on the federal budget proposed for the new fiscal year.
If the law to prohibit economic transactions is not approved and compliance measures are not implemented, we will have to impose RS400 billion at RS500 billion in new taxes, repeated by the Minister of Finance twice to register its point.
“We have two ways: either we ensure the application or present additional measures of up to RS400 billion to RS500 billion. That is why we will go to Parliament to help us with the amendments and the enabling legislation,” he added.
He said that the International Monetary Fund has accepted the government’s point of view that it can obtain additional RS389 billion in the next fiscal year through application measures, which is not possible without a new legislation.
Transactions to prohibit
In the budget, the Government has proposed restrictions on the economic transactions of non -eligible persons that lack sufficient financial resources. These restrictions include: a reservation prohibition, purchase or registration of motor vehicles; Prohibit register, record or attest to the transfer of real estate; a prohibition of selling values, including debt values or mutual fund units, not eligible people; and the prohibition of opening or maintaining current, savings or investor stock accounts.
Only people who have 130% of cash value and equivalent assets, which include local or foreign currency, fair value of gold market, net realizable value of shares, bonds, accounts receivable or any other equivalent asset in cash, will be eligible to buy said assets.
RS37,000 appropriate minimum salary
In a surprising statement, the Minister of Finance defended the decision to freeze the minimum wage at RS37,000 per month, or RS1,423 per day, excluding holidays.
“Go to the industries and get your comments on the minimum wage. I think we are in a good place,” said Aurengzeb.
However, he also defended the substantial increase in the salaries of the president of the Senate and Vice President, and the president of the National Assembly and Deputy President, raised six times at RS1.3 million per month.
He said his salaries were being adjusted after nine years. Like the annual increase in government wages, the salary of parliamentarians should also increase, he recommended.
Media protests for their rights
At the beginning of the press conference, journalists expressed concern for not receiving a technical informative session of the Federal Income Board (FBR) on the Finance Law 2025 on Tuesday. They went out in protest and returned only after the information minister, Attaullah Tarar, and the president of FBR, Langial Rashid, acknowledged that such information should have been given as tradition.
The Minister of Finance, Aurengzeb, then acknowledged that the “concern” caused to journalists and said “regretted if there was something like that.”
Cash disparity
The government movement to collect taxes on 2% in online purchases to RS20,000, while charging only 0.25% for purchases that exceed that amount, it is likely that further foster the delivery of cash for high value transactions.
Dr. Najeb, a member policy of FBR, explained that although the value of the goods in such transactions is high, the profit margins are low, therefore, the lowest proposed tax rate of 0.25%.
According to the proposed fees, the Tax on a transaction of RS20,000 will amount to RS400, but for RS21,000 it will fall to RS52.
Dr. Najeb said that supermarket items have lower margins, but are taxed at higher rates than electrical products. “We do not follow previous policies where everyone suffered in the same category,” he added.
Pakistan moment in Asia Oriental
The Minister of Finance, Aurengzeb, said that reducing import tariffs would transfer Pakistan to an economy directed by export. He emphasized the importance of tariff reforms under national tariff policy.
“People ask us if income will decrease. But we want to take this country to a model led by exports, this is the discussion we must have,” he said.
The minister said that additional customs tasks of four tariff lines were eliminated and reduced for 2,700 more, all linked to raw materials aimed at benefiting exporters.
“This is a moment of Eastern Asia for Pakistan. Everything that was available in the fiscal space reflects the direction of the trip. We have tried to reduce tariffs. This is not the eventual state,” he said.
In the highest tax rate for the sale of plots, Aurengzeb said that the sale side still receives capital profits, but the purchase side should receive some relief.
The Secretary of Finance, Imdad Ullah Bosal, declared that there was no more fiscal space to reduce spending, and savings to reduce the size of the government were limited to the abolition of vacant positions.
Answering a question about Elir the population statistics of the Prize of the National Finance Commission (NFC), Aurengzeb insisted: “Everything will be done in consultation with the provinces.”
Earlier this week, the Minister of Finance had said that the population should be delicate of the NFC formula to address 2.6% of the population annual growth.
“Nothing will be done without the provinces, including the National Fiscal Pact,” he added.
To a question about the impact of reducing the surcharge of income tax by 1%, which still leaves it at 9%, in the brain leakage, Aurengzeb said that the government had established a rare direction, indicating that “anything that increases, within a year, to go down.”
“The things that had never been reversed before have now been reversed, but that is not the eventual state,” he said.
He clarified that the government is trying to send a message to the sectors that face an undue burden, particularly the formal sector, which is “serious.” “This is just a signage, from my perspective, in the right direction,” he said.
When asked about the justification for imposing a 18% sales tax on imported solar panels, FBB president, Langial Rashid, explained that the panels were importing totally or partially.
Those who added value were already taxed at 18%, while fully assembled imports were not, which put local assemblies at a disadvantage.
“We also closed the door for a future local assembly, so it was not an option. We have to create a leveling playing field,” said Langial, stating that incentives were no longer needed, given the cost of technology.
He estimated that the 18% tax on imports of solar panels would increase the recovery period of only two months, from 18 to 20 months.
Eurobond refunds
In bond payments, the Minister of Finance said that the first installment of $ 500 million in Eurobonds will be presented in September, followed by the next one in March. “We are prepared and willing to pay,” he said.
“With the improvement of international credit rating, we want to access the markets of euro and US dollar, which is expected in 2026, but certainly not this calendar year,” added Aurengzeb.
