ISLAMABAD, June 4: The government is likely to present next year’s (2006-07) budget outlay of over Rs1.54 trillion, including Rs415 billion development programme, Rs300 billion defence expenditure and a budget deficit at 4.2 per cent of GDP.
Prime Minister Shaukat Aziz will preside over a meeting of the federal cabinet in the morning to approve budgetary proposals for the next fiscal year; with a target of seven per cent economic growth rate and a projected Rs8.8 trillion ($145 billion) gross domestic product (GDP).
Minister of State for Finance Omar Ayub Khan will start his budget speech at about 5:30pm in the National Assembly to unfold an essential commodities’ subsidy package of about Rs200 billion.
The prime minister presided over a meeting with his budget team on Sunday evening to give final touches to the next year proposals, already approved in broad terms by President General Pervez Musharraf.
New measures like subsidy on pulses and electricity, imposition of tax on real estate, an incentive package for dairy and livestock sector, reduction in tax rates and taxes on the services sector would be some of the important features of the next year budget.
Sources said that the Central Board of Revenue would be tasked to collect about Rs860 billion in the next fiscal year to achieve higher tax-to-GDP ratio, through broadening of the tax base.
To achieve the objective, higher tax yields are also expected from the capital market without taxing capital market gains.
Pensioners with an age of 60-70 years would be given 10 per cent increase in their pensions while pensioners above 70 years of age would get 15 per cent more. Government employees would get about 7 per cent to 10 per cent of their existing salary as dearness allowance. The increase would not affect their pay scales or salary structure.
The source said the government would deduct taxes from the salaried class on their gross incomes by including all perks, allowances and other benefits in the salaries before enhancing the tax exemption limit. The tax rates would also go on increasing for various income slabs. However, the average tax on salaried class would be comparatively lower than what they are paying at the moment, the sources said.
The government has also decided to use computerised national identity card numbers for the purpose of all individual taxes through a new system of Integrated Tax Management System (ITMS) developed by the National Database Registration Authority (Nadra) for tracking and monitoring of taxes.
For this purpose, the utility bills like telephone, gas, water and electricity would be utilised and monitored for income and expenditure and investments in the capital market and other transactions would tracked through the Nadra’s interface.
Similarly, the government has also decided to impose capital value tax on real estate transactions, starting with a fraction of tax perhaps at 0.02 per cent. It is likely to be increased over the next years.
Likewise, the government is also planning to impose central excise duty on financial services, the sources.
The government would also provide Rs10 billion for development of the livestock and dairy sector, they said, adding that the sector would also be provided with tax incentives for boosting its productivty.
The government, they said, was planning to initiate a special programme for bridging the existing 50 per cent gap between yields of big landowners and small farmers and to give interest-free loans to small farmers. The programme would be extended to over 13,000 villages by 2015, they added. The objective is to boost the overall agriculture growth.
The government would reduce tariff rates on dairy sector’s packing machinery while duty on inputs of poultry feeds like some imported vitamins and minerals would be relaxed to help recover the recent recession.
The government would establish a Livestock and Dairy Development Board with an allocation of Rs3 billion to establish 4,000 meat and dairy farms. A farm sector insurance scheme would also be part of the budgetary proposals.
A PM’s initiative for animal healthcare through community-based services would be launched in 80 districts with an allocation of Rs2 billion.
