Ahead of IMF talks
\nFM Aurangzeb says economy has achieved stability; PPP supports govt in passing budget
\nIslamabad
\nUnleashing a tsunami of taxes, the Finance Bill 2024 cruised through the National Assembly on Thursday ahead of talks with the International Monetary Fund (IMF) for a fresh, longer, and larger bailout to save the economy\u2014which is growing at the slowest pace in South Asia\u2014from a sure debt default.
\nThe federal government presented the tax-loaded Rs18.877 trillion budget for the fiscal year 2024-25 (FY25) two weeks ago, drawing sharp criticism from opposition parties, which termed it \u201ceconomic terrorism\u201d against the people.
\nFinance Minister Muhammad Aurangzeb moved the finance bill to the lower house of the parliament, which was endorsed by the ruling alliance, including the Pakistan Peoples Party (PPP).
\nThe motion was passed with majority vote which led to the passage of Finance Bill-2024 after clause-by-clause reading and adopting amendments after due process of voting.
\nAll the amendments, presented by the opposition members, were rejected.
\nNA Speaker Sardar Ayaz Sadiq announced the passage of the bill in a live TV telecast.
\nTough revenue target
\nPolicymakers have set a challenging tax revenue target of Rs13 trillion rupees for the year starting July 1, up about 40% from the current year, in the national budget presented on July 12 that looked to strengthen the case for a new rescue deal with the IMF.
\nPakistan is in talks with the IMF for a loan of $6 billion to $8 billion.
\nThe rise in the tax target is made up of a 48% increase in direct taxes and a 35% hike in indirect taxes over revised estimates of the current year. Non-tax revenue, including petroleum levies, is seen increasing by a whopping 64%.
\nThe tax would increase to 18% on textile and leather products as well as mobile phones besides a hike in the tax on capital gains from real estate.
\nWorkers will also get hit with more direct tax on income.
\nTwin deficits
\nPakistan has projected a sharp drop in its fiscal deficit for the new financial year to 5.9% of gross domestic product (GDP), from an upwardly revised estimate of 7.4% for the current year.
\nThe upcoming year\u2019s growth target has been set at 3.6% with inflation projected at 12%. The government has decided to increase the levy on petrol and diesel from Rs60 per litre to Rs70 per litre, which the finance minister maintains would be increased gradually.
\nRs50 per litre levy would also be imposed on light diesel oil and kerosene oil, while Rs70 per litre levy would be applicable on high-octane.
\n\u2018Economy has achieved stability\u2019
\nResponding to the points of the opposition on the Finance Bill, 2024, Aurangzeb said \u201cthe economy has achieved stability\u201d.
\nHe expressed the government\u2019s determination to further enhance the stabilisation process to steer the economy towards growth.
\nSharing the economic indicators, the finance minister pointed out that there was a reduction in the current account deficit and the fiscal deficit was also under control.
\nThe minister said the currency had been stable over the last six to seven months, expressing the confidence that this stability would remain in the time ahead.
\nHe said the foreign exchange reserves had reached $9 billion and that the inflation was down at 11% from 38%.
\nAurangzeb said enhancing the tax-to-GDP ratio and reforms in State Owned Enterprises and the energy sector were part of the budget.
\nThe finance czar said the tax-to-GDP ratio would be increased to 13% in the next three years. He said the government\u2019s privatisation plan consists of two to three years and it will be executed.
\nAdditional taxes on travel
\nMoreover, during the session, it was also announced that starting July 1, an additional tax of Rs100,000 will be imposed on business class and club class tickets to the United States and Canada.
\nFor Europe, an extra tax of Rs60,000 will be levied on business class and club class tickets from the same date. Similarly, an additional tax of Rs60,000 will be applied to business and club class tickets to New Zealand and Australia.
\nTickets to Dubai, Saudi Arabia, and other Middle Eastern and African countries will see an increase of Rs30,000 for business and club class travel.
\n\u2018Killers of the masses\u2019
\nOpposition parties, mainly parliamentarians backed by the PTI, have rejected the budget, saying it will be highly inflationary.
\nIn his address, Leader of the Opposition in the National Assembly Omar Ayub said that his party rejects the \u201canti-industry and anti-people budget\u201d.
\nCalling the budget \u201ceconomic terrorism\u201d against the people, the PTI leader said the treasury benches are \u201cthe killers of the masses\u201d, who are unaware of the economic realities.
\n\u201cInflation will increase due to this budget. There will be no economic growth with this budget,\u201d the parliamentarian said, noting that electricity prices will increase from Rs70 to Rs85.
\nState Bank of Pakistan has also warned of possible inflationary effects from the budget, saying limited progress in structural reforms to broaden the tax base meant increased revenue must come from hiking taxes.
\nPTI Chairman Barrister Gohar Khan said there\u2019s no austerity plan in the budget and that during the incumbent government\u2019s tenure, a huge amount of people have become unemployed.
\n\u201cKP is being targeted because its people have voted for Tehreek-e-Insaaf,\u201d the politician added.
\nJamiat Ulema-e-Islam (JUI-F) lawmaker Aliya Kamran said that the budget has several \u201cdefects\u201d and that imposing a duty on medical devices would make the life of the poor more difficult.
\nReferring to the proposals, she said if the budget is approved, it would increase the prices of milk and stationery. \u201cNow, overseas Pakistanis will not be able to donate medical equipment either. Computers have also been taxed.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Ahead of IMF talks FM Aurangzeb says economy has achieved stability; PPP supports govt in passing budget Islamabad Unleashing a tsunami of taxes, the Finance Bill 2024 cruised through the National Assembly on Thursday ahead of talks with the International Monetary Fund (IMF) for a fresh, longer, and larger bailout to save the economy\u2014which is […]<\/p>\n","protected":false},"author":2,"featured_media":415178,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[],"class_list":{"0":"post-415198","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-top-news"},"yoast_head":"\n