Pre- Budget 2019-20: Efforts on to rationalize tax regime.

Byline: Nazir Ahmed Shaikh

The National Economic Council (NEC),the country's highest decision-making body on economic policy, in consensus with federal cabinet is looking forward the various proposals that could create a revenue cushion of about Rs1.45 trillion in the next fiscal year, taking the year's revenue target to Rs5.55 trillion from a dismal Rs4.2 trillion. Over Rs700 billion in additional revenue has to come from two areas viz sales tax and income tax. However, proposals are underway for increasing general sales tax by 1 per cent or 1.5 percent to yield over Rs350 billion.

The proposed budget strategy paper estimated the next year's federal current expenditure by more than Rs6 trillion, including interest payments of more than Rs2.8 trillion and normal defense expenditure of about Rs1.28 trillion, which was more than 16 percent higher than the original estimates. The National Economic Council (NEC) has approved the National Development Outlay of 2019-20 amounting to Rs1.837 trillion, including the federal Public Sector Development Program (PSDP) and provincial Annual Development Plans (ADPs). The NEC reviewed the Annual Plan 2018-19 and the proposed Annual Plan 2019-20. It approved a GDP growth target of 4 percent along with a sectoral growth of agriculture (3.5 percent) industry (2.2 percent) and services sector (4.8 percent) for the financial year 2019-20.

The increase in revenue would come from additional tax measures of about Rs500 billion while Rs100 billion or so would be generated through widening of the tax base with major contributions coming in the period following the amnesty scheme this year.The Federal Board of Revenue (FBR) has claimed that it could provide about Rs220 billion or so through better monitoring and enforcement measures while about Rs520 billion would automatically flow on account of the inflation rate of 9 percent and 4 percent economic growth rate targeted for next year. About Rs200 billion would be generated through withdrawal of tax exemptions. The recovery of about Rs200 billion in arrears through settlement of litigations is not taken into account as a revenue source.

The NEC will consider a seven-point agenda, including a review of the Annual Plan 2018-19 and proposed annual plan for 2019-20 and draft 12th five-year plan (2018-23). The NEC will also review Public Sector Development Program during the current year and approve next year's development plan.

The 12th Five Year Plan (2018-23) would...

To continue reading

Request your trial

VLEX uses login cookies to provide you with a better browsing experience. If you click on 'Accept' or continue browsing this site we consider that you accept our cookie policy. ACCEPT