Following are the highlits of the Budget 2018 – 2019 presented by the new finance Minister Miftah ismail
· We have achieved a highest growth in 13 years, low inflationary environment, and overall macro-economic stability.
· Next government will be free to make changes in the budget priorities.
· We inherited a collapsed economy, low growth, high inflation and high fiscal deficit.
· During five years preceding 2013, average inflation was 12% and average GDP growth was 2.8%.
· Last year, government achieved GDP growth of 5.4% – highest growth rate in last 10 years.
· For this year, growth is projected 5.8% – highest in last 13 years.
· Size of the economy expanded from Rs.22,385 billion in FY2013 to Rs.34,396 billion in FY2018.
· Per capita income increased from Rs.129,005 in 2013 to Rs.180,204.
· Pakistan’s economy is 24th largest economy in the world.
· Agriculture sector shows the highest growth in past 18 years of 3.8%.
· Industrial production grew by 5.8% this year.
· Services sector witnessed a remarkable growth of 6.4%.
· Curtailed average inflation to less than 5 percent in the past five years, compared to 12 percent between 2008-13.
· During current year, fiscal deficit will be contained below 5.5% of GDP.
· For current fiscal year, FBR revenue is projected to increase to Rs.3,935 billion.
· Tax to GDP ratio will increase to 13.2% this year.
· Credit given to agriculturalists would increase to Rs.800 billion by June 2018.
· Credit to private sector has grown by 383 percent, from Rs.93 billion in 2013 to Rs.441 billion by April 2018.
· During first nine months imports increased by 17% comparing last year.
· Foreign Direct Investment increased to $2.7 billion in FY2017 from $1.3 billion in 2013.
· During the first 9 months of current fiscal, it has increased to $2.1 billion.
· We expect remittances to increase to more than US$20 billion against $19.3 billion last year.
· Presently reserves held with SBP stand at $11 billion.
· This year 8,349 companies were registered till March 2018 compared to 5,883 last year.
· A total of US$223 billion were invested in the economy from both domestic and foreign sources over the five years.
· We have added 12,230 megawatts of new generation capacity.
· Complete tax exemption has been given to people who earn upto Rs.12 lakh per year.
· Tax will be levied at rate of 5 percent for income between two and four lakhs monthly.
· People earning above four lakh monthly will be taxed at the rate of 15 percent.
· Undeclared incomes earned before 30th June 2017 and held as local assets can be regularized on payment of 5% of the asset value.
· State is being given the power to purchase land and property at 100% of the declared value within six-months of its registration.
· Non-filers will be barred from procuring property above Rs.4 million.
· FBR rate on property is being abolished from 1st July 2018.
· Provinces have been advised to abolish DC rates.
· Under budget targets, real GDP growth rate of 6.2% to be achieved.
· Inflation to remain below 6%. Tax to GDP ratio of 13.8%. Budget deficit of 4.9% of GDP.
· Foreign exchange reserves to be increased to $15 billion.
· FBR tax revenue target is proposed to be fixed at Rs.4,435 billion.
· Rs.125 billion proposed for Benazir Income Support Programme.
· Prime Minister’s Youth Scheme will continue.
· Total size of the PSDP is proposed as Rs.800 billion.
· All incentives for agriculture sectors shall continue during 2018-19.
· By 1st July, there will be a reduced uniform GST rate of 2% on all fertilizers.
· Setting up of an Agriculture Research Support Fund and Agricultural technology Fund are being proposed.
· Five export sectors like textiles, leather, sports goods, surgical goods and carpets shall continue to remain in zero-rated sales tax regime.
· Prize scheme for home remittances is proposed.
· Three percent custom duty on import of film and drama production equipment.
· Revolving fund of deserving artists is proposed.
· Government proposes sea water desalination plant for Karachi.
· New programme for 100 % enrollment of children in school being launched.
· Rs 23.7 billion to be allocated for Diamer Bhasha Dam.
· Rs 44.7 billion proposed for AJK and Gilgit Baltistan and Rs 24.5 billion for FATA.
· Rs 90 billion for rehabilitation and reconstruction of IDPs’ homes in FATA.
– Property transactions to be recorded on value declared by buyer, seller, to discourage whitening of black money
– To cut under-declaring of value of property, FBR notified rates abolished
– 1% adjustable advance tax from purchaser to replace existing withholding tax on sellers, purchasers
– Provinces requested to abolish provincial rates on stamp duty and collect 1% on value declared by buyer, seller
– FBR gets right to buy back property by paying 100% over declared value property
– Non-filers, not permitted to buy property with declared value exceeding four million rupees
– Super Tax rate to be reduced by 1% for banking and non-banking sector
– Corporate Tax to be reduced from 30% in 2018 to 25% in 2023
– Rate of tax on dividends of Real Estate Investment Trust cut from 1.5% to 7.5%
– Rate of withholding tax from non-filers to be reduced from 0.6% to 0.4% on bank transactions
– Threshold for tax deduction on payments for goods and services enhanced to Rs 30,000 and 75,000 respectively
– 10 years income tax exemption for refineries with capacity of 100,000 barrels per day
– Aziz Tabba Foundation, Saylani Welfare and Al-Shifa trust get tax exemption
– Withholding Tax on non-filers up from 7% to 8% in case of company, and 7.75% to 9% in non-corporate case
– Tax of Rs 1000 on income between Rs 400,000 to Rs 800,000 and Rs 2000 on income from Rs 800,000 to Rs 1200,000
– Rate of Sales Tax be reduced from 17% to 12% on RLNG
– 10% Sales Tax on fish feed removed
– Sales Tax on agriculture machinery reduced from 7% to %5
– Exemption on 21 types of computer parts imported by manufacturers to be removed to encourage local assembly
– Zero rating for stationery items be restored
– Value addition tax of 3% on import of second hand clothing, footwear excluded
– Further Tax rate increased from 2% to 3%
– Federal Excise Duty on locally produced cigarettes enhanced ro Rs 3964, Rs 1770 and Rs 848 per thousand cigarettes
– Customs Duty of 3% on import of bulls withdrawn
– Customs Duty on import of feed for livestock reduced from 10% to 5%
– To address issue of physical, mental stunting in children 3% duty on import of micro feeder equipment withdrawn
– 5% customs duty on on cancer drug Tasigna withdrawn
– Customs Duty of 11% on corrective eyesight glasses reduced to 3%
– Regulatory Duty on import of optical optical fibre cable reduced from 20% to 10%
– Duty on optical fibre cable and raw material cut to 5%
– Customs Duty on Acetic Acid cut from 20% to 16%, on import of plasters cut from 16% to 11%
– Customs Duty on Carbon Black rubber grade for tyres cut from 20% to 16%
– Customs Duty on silicone electrical steel sheets for transformers reduced from 10% to 5%
– Duty on import of electric cars to be reduced from 50% to 25%, besides exemption from regulatory duty of 15%
– Import of CKD kits for assembly of domestically produced electric cars proposed at 10%
– Customs Duty on LED parts and components of 5% withdrawn
– To promote use of electric vehicles 16% duty on charging stations withdrawn
– Customs Duty cut from 20% to 11% on pre fabricated structures for hotels, motels in hill stations
– BISP funding increased to Rs 124.7 billion, stipend up from Rs 3000 to Rs 4,834
– BISP beneficiaries to get one-time cash grant of Rs 50,000 to start business under NPGP
– Rs 688 million allocated for Pakistan Poverty Alleviation Fund
– Rs 3.5 billion for PM Interest Free Loan under PPAF
– 10% increase in pay, pension of government civil military employees
– House rent ceiling, allowance increased by 50%
– Minimum Pension up from Rs 6000 to Rs 10000
– Minimum Pension for pensioners above 75 now Rs 15000
– Rs 12 billion allocated for Advances to govt servants for house building, transport
– Rs 5 billion for Senior Officers Performance Allowance
– Relief for widow borrowers from House Building Finance Corporation increased from Rs 0.35 million to Rs 0.6 million
The target GDP growth rate for the upcoming fiscal year has been set at 6.2pc against FY17-18’s target of 6pc.
The total tax target is Rs 4,888.6bn, of which the FBR taxes comprise Rs 4,435bn.
“This target will be achieved through improved tax steps and improved tax administration. The tax base is being expanded and the per cent of tax is being reduced,” the finance minister said.
The non-tax revenue target has been set at Rs1,246bn, according to a copy of the budget 18-19.
The provincial share in tax revenue will be increased from Rs2,316bn to Rs2,590bn, Ismail added.
The defence budget has been set at Rs1,100bn from a revised budget estimate of Rs999bn in the previous year ? 19.4pc of the total budgeted outlay, while the PSDP has been slashed to Rs800bn for FY18-19.
Under the PSDP, Rs47bn has been allocated to the Higher Education Commission, Rs37bn for basic health and Rs10bn for the PM’s Youth Programme.
The government also intends to restrict the overall fiscal deficit to Rs1890.2bn or 4.9pc of the GDP, down from the revised estimates for the year 2017-18 which stood at 5.5pc, and inflation to below 6pc, Ismail said.
The government estimates forex reserves to come to about $15bn in FY18-19.
The target tax to GDP ratio is 13.8pc, while the target net public debt to GDP ratio 63.2pc, the finance minister announced.
“The objective of the medium term macroeconomic policy, besides improved economic growth, is to correct the balance in the external account,” Ismail said. “The fiscal deficit will be reduced in the next three years and the environment for investment will be improved.”
“The government will continue investment in social protection and the Benazir Income Support Programme, and will take steps for the underprivileged communities through targeted subsidy schemes. Rs125bn has been allocated to the BISP, while Rs189bn has been set aside for total subsidies. Rs10bn has been proposed for PM’s Youth Scheme,” he said.
Agricultural production is slated to increase, Ismail said, with the government intending to continue implementing an agricultural policy in FY18-19 “until we end the tradition of subsidies”.
Estimated loans to the agriculture sector will increase to Rs1,100bn, he said.
“A second green revolution is needed for advancement in the agriculture sector,” the minister explained. “The next federal government will leave all decisions regarding subsidies to the provincial governments while the federal government’s focus will be on providing a favourable environment for research and development, an increase in production, access to markets and improvement in technology.”
“I am happy to announce that while we had proposed a 3pc sales tax on fertiliser, the PM has approved sales tax of 2pc only on the recommendation of Sikandar Bosan, the food security minister.”
The 2pc reduction in GST on agricultural machinery has been proposed from 7pc to 5pc, while a relaxation in dairy and livestock taxes has also been proposed.
“Pakistan is the 5th largest cotton grower in the world but lags behind in exports of cotton products,” Ismail observed. “In order to improve the quality and quantity, the subject of cotton has been handed over to the Ministry of Food Security and Research from the Textile Ministry.”
“The govt is starting an Agricultural Support Fund with Rs5bn which will support research on new kinds of seeds and plants in order to increase agri output,” the minister said, adding that another Rs5bn had been set aside for the promotion of agri technology.
“The government wants to introduce renewable energy in all sectors,” Ismail added. “It is proposed that the 16pc duty on charging stations for electric cars be ended.”
In the aftermath of the 7th NFC, the provinces have been issued an extra Rs2,500bn in eight years, and the federal government will have a reduced share in the NFC, he said.
The government announced a Rs25bn special package for development in Karachi.
A large-scale desalination plant will be set up in Karachi to end the city’s water woes, Ismail said.
Rs5bn will be allocated for the construction of roads, fire brigades and bridges in the coming fiscal year. Rs8bn will be set aside for expansion of the Expo Centre, he added.
Packages for children
A special package called the 100,100,100 programme focusing on children’s development was announced by Ismail. Under the package, the government is targeting 100pc admission, attendance and graduation of children in schools.
The government will pay for the transportation of female students to school, he added.
“This is a promise made by the Parliament to the people of Pakistan. We have failed for the past 70 years, but it will not happen anymore, although education is a provincial subject,” Ismail asserted.
Another special package amounting to Rs10bn ? along with a supplementary grant ? was announced for children’s health. “40pc of children experience stunted growth,” the finance minister said. “It will be tolerated no more,” he said, adding that stunting would end by 2020. “This is the prime minister’s promise.”
PM’s Health Programme
The PM’s National Health Programme, under which 3,000,000 families across Pakistan are already receiving coverage, will be extended to all districts in the country and will help us achieve the Sustainable Development Goals, Ismail announced.
“A survey will be held every two to three years to provide us better statistics,” he added.