ISLAMABAD, May 22: In its dying days, the caretaker government has decided to introduce a Rs152 billion ‘mini-budget’ through a presidential ordinance to provide a cushion to the incoming PML-N government.
The move came at a time when the new National Assembly is about to start functioning within 10 days and the PML-N government plans to present the federal budget for the fiscal year 2013-14 by mid-June.
Law Minister Ahmer Bilal Soofi confirmed that President Asif Ali Zardari had signed the ordinance to introduce new taxation measures, but presidential spokesman Farhatullah Babar denied it.
“The president did not sign it (the ordinance) today, but remember tomorrow is another day,” Mr Babar said.
This, however, indicates that such an ordinance has at least reached the Presidency.
The ordinance has reversed most of the relief in taxes announced by the PPP-led coalition government in the last year’s budget, leaving political and financial experts clueless as to why the president has agreed to such a proposal.
The proposed string of taxation measures, mostly in the form of indirect taxes, will add to the burden on the masses. The new taxes are in addition to Rs60bn introduced by the previous government through SROs in March. The news in the media about imposition of new taxes came the day Nawaz Sharif, the prime minister-in-waiting, met President Zardari for the first time after the May 11 polls.
The direct taxation measures will yield another Rs52bn in income tax and generate Rs120bn revenue for the national exchequer, including Rs75bn sales tax, Rs25bn federal excise duty and Rs20bn customs duties.
Although a draft of the ordinance has been sent to the Presidency, the Federal Board of Revenue is reluctant to share it with the media. “We have not yet received the signed copy (of ordinance) from the Presidency,” FBR chairman Ansar Javed told Dawn on telephone.
A 10pc withholding tax has been proposed on domestic consumers using more than 1000 units of electricity and increasing this tax on cash withdrawal from banks to 0.3 from 0.2pc. A new slab of 12.5pc has been introduced on income from property exceeding Rs1.5 million.
One per cent withholding tax has been proposed on all items imported duty free. Income tax on export proceeds will increase to 1.50 from 1pc and the minimum tax rate on turnover for the business community to one per cent from 0.5pc.
On the booking of a new car, 5pc tax of the value of the car will be charged.
Instead of revising downward, the caretaker government has decided to increase general sales tax to 17 from 16pc. It will generate additional revenue of Rs40bn, but fuel inflation. The GST on sugar has been increased to 17 from eight per cent.
The taxation measures propose a 2pc GST on supply to unregistered persons and withdrawal of zero-tax on domestic sales of five sectors — textile, leather, carpet, sports and surgical. The new items subject to GST include bottled water and fertilisers. The new GST measures will yield additional revenue of Rs75bn.
The increase in federal excise duty on cigarettes and tax on lubricating oil supplied to Pakistan Navy for its vessels will yield another Rs25bn. On the customs duty side, zero-rating has been partially withdrawn and the rate on other items rationalised. The FBR estimates the measures will yield an additional Rs20bn, but customs officials are of the opinion that the national exchequer will get only Rs5bn.