LAHORE: Federal Minister for Overseas Pakistanis, Dr Farooq Sattar said on Wednesday that for sustainable growth and political stability in the country, government would have to prepare out-of-book and innovative budget.
Sattar, who is also Muttahida Qaumi Movement (MQM) parliamentary leader, was speaking at Lahore Chamber of Commerce and Industry, where LCCI President Irfan Qaiser Sheikh, SVP Kashif Younis Meher, VP Saeeda Nazar, former Presidents Iftikhar Ali Malik, Mian Anjum Nisar, Mian Muzaffar Ali, former SVPs Abdul Basit and Sheikh Muhammad Arshad also spoke on the occasion.
Sattar said the country at the moment is facing multiple challenges and the economic crisis is on the top of the list, therefore, the government would have to come up with out-of-box solutions otherwise the very survival of the country is at stake.
He said that it is not only the economic recovery that is direly needed at this point in time but measures are needed to make it sustainable for years to come.
“We would have to bring down the cost of doing business for making Pakistani goods competitive in the world market where they have lost their due place,” said the MQM leader adding that relief to common man is need of the hour and it is only possible if the common man is made part of budget making process.
He suggested an increase of Rs 400 billion in direct taxes to deal with the challenge of fiscal deficit.
Sattar said his party has proposed a reduction of 10 per cent in defence budget and a sizeable cut in civil expenditure to overcome prevailing economic challenges. The additional collection of Rs 400 billion included Rs 100 billion through agriculture income tax, Rs 50 billion through Afghan transit trade, dealing with under-invoicing and smuggling Rs 50 billion and raising another Rs 50 billion by tax on agricultural trading. Improvement in monitoring, broadening the tax base and elimination of tax evasion due to corruption would generate another Rs 200 billion.
“Direct taxes are proposed to be increased from existing 32 per cent to 45 per cent and indirect taxes are proposed to bring down from 68 per cent to 55 per cent in the next fiscal year,” he said and proposed abolition of petroleum levy.
He proposed an allocation of Rs 250 billion subsidies for the energy sector to resolve the problem of inter-circular debt and Rs 150 billion subsidy for food and fertiliser support to help revive the agriculture sector as well as reduction in sales tax rate from 16 per cent to 12 per cent, import duty from 10-15 per cent to 5 per cent and abolition of the SRO system.
He also proposed that there should be no sales tax and customs duty on machinery and raw materials essential for industries. Complete abolition of petroleum levy and a reduction in interest rate from 12 per cent to 10 per cent to facilitate revival of local industry.
Sattar said that Rs 100 billion revenue losses on account of reduction in sale tax from 16 to 12 per cent would be bridged through additional measures proposed for revenue generation. He said improving governance in State-Owned Enterprises (SOEs) would control losses in these entities, adding that these units should be revived through public-private partnership model.
He claimed that reduction in taxes as well as civil and defence expenditure would have a very positive trickle down effect on the common man, as it would reduce the fiscal deficit and subsequently, the inflation.
The LCCI president said that the budget for the year 2012-13 must be focused on energy sector as country's economic revival hinges on availability of cheaper and uninterrupted power and gas supply. The government must allocate maximum funds for construction of dams/water reservoirs, tapping of Thar Coal, completion of Iran-Pakistan gas pipeline and establishment of LNG terminals.