ISLAMABAD: Finance Minister Ishaq Dar on Friday placed a demand before National Assembly for borrowing a whopping Rs10.4 trillion in new fiscal year to service maturing public debt while announcing the withdrawal of a controversial amendment in the income tax law.
The minister faced great difficulty in delivering the budget windup speech due to thin presence of members of the National Assembly – proceedings were twice disrupted after opposition lawmakers pointed out that members present were less than the minimum required strength of 86.
Deepening internal rifts in the ruling party in absence of Prime Minister Nawaz Sharif appeared to be one of the reasons behind thin presence on treasury benches.
Dar also announced more incentives for agriculture sector, government servants and low-grade army personnel while promising to increase the salaries of the members of parliament after consulting with Prime Minister Nawaz.
While concluding the debate on budget 2016-17 that continued for about 12 days, Dar announced the government has decided to withdraw clause 23 of the Finance Bill that had been proposed to bring foreign trusts under the ambit of law.
“The purpose of this amendment was not to give relaxation to anybody rather it has been proposed to get the membership of the Organisation of Economic Cooperation and Development (OECD)”, said Dar while withdrawing the amendment.
Last week, the opposition dubbed the clause ‘Maryam law’, alleging that it was a “move to give backdoor escape to the prime minister’s daughter, Maryam Nawaz, in the Panamagate scandal”.
Dar also presented a Rs10.4 trillion demand to service and repay the domestic and foreign debt. The demand was presented as ‘Charged Expenditure’, in which the National Assembly can only debate but cannot veto the spending bill. Out of Rs10.4 trillion, an amount of Rs1.36 trillion is booked in the budget as cost of debt servicing. The remaining sum will be directly raised from international and domestic markets to pay off the past debt.
The government will borrow Rs8.38 trillion to pay domestic debt that is maturing in the next fiscal year. Rs698 billion will be borrowed from external sources to repay foreign debt inducing short-term loans.
Dar said public debt increased by Rs4.9 trillion to Rs19.2 trillion from July 2013 to March 2016, which was less than what the PPP government added in its five-year term.
The minister vowed that his government would amend the Fiscal Responsibility and Debt Limitation (FRDL) Act of 2005 through the Finance Bill 2016 after his understanding to amend the FRDL Act through a separate bill could not materialise. Earlier in the day, Law Minister Zahid Hamid withdrew the FRDL Bill from the agenda of the Senate after proposing it as a separate bill.
Official statistics credibility
Dar insisted that official statistics were credible after MNAs questioned the figures of annual growth rate, budget deficit and unemployment. He said people were questioning the statistics without presenting evidence of manipulation.
Contrary to Dar’s claim, independent economists have already presented their findings about manipulation of the annual GDP figure.
Dar announced duties and sales tax on import of naval ships and the federal excise duty on chartered flights for movement of military troops has been abolished.
He announced a merger of 2015-16’s 7.5% ad-hoc allowance of the government employees into their basic salaries, bringing the total number of ad-hoc relief merged in the salaries to three. This will marginally increase the take home salaries of employees. Dar also announced an increase in residence compensation allowance for military officials ranked as sepoys to junior commissioned officers in the range of Rs208 to Rs560 per month.
He reduced custom duties on import of raw material for manufacturing of SIM cards and smart cards.
The minister announced to halve the sales tax rate on locally manufactured and imported tractors to 5%.He announced to abolish custom duties on import of harvesters and planters. The sales tax on laser land levelers has also been abolished. Dar said that the agriculture package that was announced in budget will take effect from the day president will give assent to the budget instead of from July 1st. The sales tax on import of dairy sector machinery and equipment has been reduced from 17% to 5%.
Dar also announced tax benefits for promoting digitisation. Pakistan Electronic Media Regulatory Authority (PEMRA) had recommended this package.
Courtesy : Express Tribune