Another Finance Bill-2019 tabled in NA

Tariq Ullah Wardak

ISLAMABAD: The government on Wednesday announced an incentive package to boost manufacturing and exports, encourage low-cost housing and facilitate agricultural financing to boost economic activities, besides promoting ease of doing business, simplifying procedures for setting up businesses, and cutting taxes and duties in diverse sectors.

Introducing the Finance Supplementary (Second Amendment) Bill, 2019 here in National Assembly, Minister for Finance Asad Umar said it was not a new budget but was an economic reform package aimed at laying strong foundation for the country’s economy.

He said in order to promote local industry and boost exports, import duty on hundreds of raw items used for manufacturing were being reduced or exempted.

He said it had also been proposed to reduce the tax rate on interest income on bank loans taken by Small and Medium Enterprises (SMEs) companies from existing 35 percent plus 4 percent supper tax to net 20 percent.

Similarly, he said, the government was committed to boost agriculture and construction sectors, as during first six months of its tenure, the agriculture loans had increased by 22 percent. It had proposed to reduce the tax rate on the interest income on agriculture loans, he added.

Likewise, the minister said, the tax rate on the interest income for loans for building small homes had been cut down to 20 percent from 39 per cent. He said ban on purchase of small vehicles with engine capacity of up to 1300 CC for non-filers was also being withdrawn, however, tax rate for non-filers on purchase of the vehicles was being increased. The minister said tax exemptions were introduced to attract new investment in Specialized Economic Zones (SEZs) under the China Pakistan Economic Corridor (CPEC) and other industrial units.

In the Greenfield projects, exemptions were given in sales tax and customs duty for import of plants and machinery, he said and also announced relief in sales and income tax and customs duty on manufacturing of equipment used for renewable energy, including solar panels and wind turbines, for the next five years.

Asad Umar said franchise based sports would be encouraged with tax relief to promote healthy activities among the youth.

He said from July 1, super tax of 4 percent on the non-banking companies would be abolished, corporate tax would continue to be reduced by one percent every year and to boost savings and re-investments, tax on savings and re-investments of companies would end from July 1.

The group formation of industries in the private sector would be encouraged with relief on taxes on dividend earnings, Asad added.

He recalled that the downfall of stock exchange index had started in May 2017 and in seven months it had dropped from 53,000 to 38,000 points, while during the five months of Pakistan Tehreek-e-Insaf government, it had fallen by 5,000 points. During the last three weeks, the stock index again rose by 3,000 points, he added. The minister said withholding tax of 0.02 percent on stock shares was proposed to be abolished and the stock traders could carry forward the capital losses to offset their deficit. The only increase in tax rate, he said, would be on 1800 CC imported vehicles while three taxes on cheaper phones would be merged into one and there would be no reduction in tax on expensive phones. He said tax refunds of Rs 200 billion were not paid to the exporters by the previous regime, but now the incumbent government would issue promissory notes by mid February so that businessmen could take credit from banks which would ensure liquidity for their businesses.

Additional export facilitation measures and duty drawbacks would be informed the Adviser for Commerce, he said, adding administrative cost on palm oil would be ended to cut down prices.

He said the government would introduce legislation to resolve court matters between itself and the business sector to facilitate industry while measures were introduced in the finance bill that would reduce the price of fertilizer by Rs 200 per bag. The productive index unit for farmers would be raised from 4000 to 6000 units and regulatory duty for diesel engines would be cut down from 17 percent to five percent while in line with the order of Supreme Court duties would be reduced to improve health facilities, the minister said. He said support from IMF would be availed to save the people from the financial burden. The country’s economic future was bright as it was not in the hands of those who had bought properties in London, Switzerland and Dubai, he added. The finance minister said the government was launching a scheme of Revolving Fund with a seed money of Rs 5 billion under which loans would be provided for building small houses. He said keeping in view its commitment to facilitate ease of doing business, the government had proposed that  businessmen would not be bound to submit their statements of withholding tax every month, but  twice a year. The tax for those, who held marriage ceremonies in hotels or wedding halls of less than 500 square yards, was being reduced from Rs 20,000 to Rs 5,000, he added. Asad Umar said the government was also proposing to exempt import duty on the news print, which was aimed at economically strengthening the media industry. He said the so-called business friendly PML-N regime had broken the back of exporters and industrialists, however, the current government was committed to take practical steps to promote the sector. He said regulatory duty on import of hundreds of tariff lines was either being reduced or abolished. He said when the Pakistan Tehreek-e-Insaf government took over the charge, the economy was in the worst condition.

The government, however, accepted the challenge of putting the economy on the right track.

“We will lay the foundation of such economy that will help next governments to move forward and make the country prosperous.” He said if the current government would have to seek a bailout package from the IMF, it would be the last one. The minister said the government was legally bound to help the poorest segments of society in becoming  economically self-dependent.

He said in the election year, the previous government tried to buy the votes by giving illogical incentives, which increased the budget deficit from 4.1 percent to over 6.6 percent. The last PML-N government, he said, also brought the power sector on the verge of destruction as its deficit reached Rs 450 billion while that of gas sector to record Rs 150 billion.

The minister said the current government had to take hard decisions due to the last rulers’ wrong policies.

“The difficult decisions are now yielding positive results as the trade deficit is decreasing with exports showing growth and imports witnessing declining trend,” he added. He hoped that due to the prudent policies of PTI government, the Gross Domestic Product (GDP) growth in 2022-23 (last year of the current government) would be the highest and the budget deficit the lowest in 15 years. He said next week, the federal government would present a medium-term economic framework in which it would set its economic goals.

The minister said the PML-N was defeated in the last general election as its last Punjab government had the budget deficit of Rs 40 billion to its credit. On the contrary, the last PTI government in KP fought the election with surplus budget of Rs 35 billion, he added.

ISLAMABAD: Federal Finance Minister Asad Umar will present mini budget in national assembly today (Wednesday).

According to reports, the PTI led government is expected to impose federal excise duty on mobile phone cards. Under the mini budget, income tax rate is expected to be increased on daily wage class of the country.

However, the government is expected to decrease tax on imported raw materials in the trade sector and an increase in the price of imported vehicles is expected. The minister is also expected to suggest reforms to increase exports of the country.