ISLAMABAD, June 8: Proposals for the constitution of the NFC would be sent to the prime minister next week from where they would be submitted to the president for approval as members on the commission have been nominated by all the provinces, said Finance Minister Shaukat Aziz at his post-budget press conference here on Sunday.

He said the new NFC award would be announced after evolving a consensus among the provinces as had been the practice in the past, and added that an increase of 11 per cent had already been made in the provincial resources.

Explaining the salient features of the next year’s budget, the finance minister said a 15 per cent increase in the salaries of the federal government employees would go into effect from July 1.

He said this raise would have an additional impact of Rs10 billion, including Rs8 billion under the head of salary and Rs2 billion in pensions on the exchequer.

He said the public sector corporations have their own boards of directors and they could increase salaries of their employees accordingly if they so desired. There would be no reduction in the number of government employees next year, he said while responding to a question.

The minister said special accounts for widows would be opened with the National Savings Directorate on the pattern of pensioners on which they would get comparatively higher profits.

He claimed that as many as 80 national savings schemes were being misused and some banks were also involved in this misuse.

The minister said the federal government employees would be able to obtain loans from the House Building Finance Corporation on government guarantees which would be repaid by the government from their monthly salaries.

The procedure in this regard would be announced in the next few days and the provincial governments were also being asked to introduce similar schemes for their employees.

Talking about priority areas of the government during the next fiscal year, the minister said agriculture, SMEs, housing and construction and large-scale manufacturing would be the focus of the government’s strategy for job creation and investment.

Shaukat Aziz said the federal government was preparing a special package in consultation with the provincial governments to acquire land for low and medium-cost housing for government employees and other people. He, however, clarified that details of the proposal were still to be worked out.

The minister said the reduction in duty on luxury cars (1800cc and above) from 200 per cent to 150 per cent was a quid pro quo with the European Union for the market access it provided to Pakistan for its textile exports in the post-9/11 period.

This, he said, was also a message for the local manufacturers that nothing was sacred.

Mr Aziz said the philosophy of the budget 2003-04 was to provide relief to the people, introduce a policy for agriculture which could bring better price to the farmer in the export market, expand the industry through sufficient credit availability to increase exports, promote growth and investment, create employment opportunities, improve the health of public sector entities, and consolidate the macroeconomic benefits achieved during the last three years.

The minister said the budget contained no new tax and claimed if there was any increase in the tax rate, it would not hit the end-consumer because that had been targeted to only control tax evasion.

He said 60 per cent more allocation had been made for water sector with a view to promoting agriculture sector.

Most of these allocations would be spent on the lining of canals and watercourses, medium-size new water reservoirs and repair of existing barrages on an emergency basis. However, he said the major challenge in this regard would be of implementation.

Shaukat Aziz said sales tax on all machinery relating to packing, grading, storing, processing and export of agriculture products had been reduced to zero so that farmers could get a better price of their produce in the international market particularly in the post-2005 WTO regime.

He said commercial banks would be encouraged to offer loans to agricultural sector, while leasing companies would be encouraged to provide financing for tractors and bulldozers.

The minister said replacement of 10 per cent duty with 20 per cent sales tax on oilseed import would encourage the local farmers to take up oilseed production.

Responding to a question, he said customs duty on 259 items, including raw materials and those prone to smuggling, had been reduced to benefit engineering, agriculture, casting, forging, ceramics and cutlery industries.

The minister said on the demand of the Federation of Pakistan Chambers of Commerce and Industry audit of sales tax would be done once in a year.

He said export refinance was currently available at 2 to 3 per cent for the manufacturing sector and this policy would continue.

Mr Aziz said all these concessions had been made possible because of fiscal space the government had achieved during the last three years, as the debt repayment cost had been brought down to 36 per cent from 66 per cent of the budget allocations.

He said the zero rating of export items would be improved through DTRE rule. This will have a Rs6 billion revenue impact on the national exchequer but would be recovered as a result of additional activity.