In the upcoming budget 2024-25, the federal government of Pakistan has decided to impose around 2500B PKR in additional taxes, to be presented on Wednesday. Details reveal that the Federal Board of Revenue (FBR) has given a tax group target of 12,970 billion PKR. However, FBR officials have expressed reservations, stating that new significant tax measures are being proposed for the first time, and the system cannot handle them. Finance Minister Aurangzeb stated this while talking to media persons in Islamabad today. She said this while presenting the economic survey at 5:30 PM today.
The government’s survey says it still has major economic targets, like controlling inflation and attracting foreign investment, but it has contained dollar smuggling.
The Daily Times has seen a document stating that the fiscal year 2024-25 budget will be submitted to Parliament on Wednesday. The document indicates that the government intends to levy new taxes amounting to Rs2.5 trillion. Under various heads such as income tax, capital value tax (CVT), sales tax on goods & services (STG&S). And federal excise duty (FED).
Further disclosure revealed that authorities had assigned FBR a revenue collection target of Rs12.97 trillion for the next fiscal year. They project that inland revenue taxes will generate Rs11.379 trillion, while they expect direct taxes to contribute Rs5.512 trillion.
The federal minister announced that Income Tax will contribute Rs5454 billion against the current fiscal year’s target. The budget was set at Rs3721 billion, indicating an increase of Rs1773 billion. While setting up an additional target of Rs1312 billion for Sales Tax, she said we aim at collecting Rs4919 billion next year as compared with this FY, where we had targeted Rs3607 billion so far.
She also informed about the allocation made under the Sales Tax on Goods, i.e., rupees four thousand eight hundred ninety-eight billion, and services. Which amounts is twenty billion. However, these figures were rupees three thousand five hundred ninety-two billion for goods and fourteen billion for services. Next fiscal year, proposals suggest collecting one thousand five hundred ninety-one billion rupees in customs duty. They are showing an increase of Rs267 billion over the current year’s target of Rs1324 billion.
The Workers Welfare Fund target is 16 billion PKR for the next fiscal year. The budget also considers increasing taxes on imported mobile phones. Including federal excise duty and possibly higher PTA taxes on luxury imported phones. GST on imported mobile phones is already 25%, making further increases challenging.
Of the 3720 billion PKR target, approximately 1200 billion PKR in taxes could be part of an automatic system due to inflation and GDP growth. Still, the FBR will need help with the 2500B PKR in new tax measures. An anonymous senior FBR official stated that this is their first time taking such significant revenue measures. Which might lead to increased inflation.
According to the economic survey document, several key financial targets, including GDP growth, were unmet during the current fiscal year. Total debt reached 67,525 billion PKR, domestic debt at 43,432 billion PKR, and external debt at 24,093 billion PKR. The government failed to meet targets for GDP growth, inflation control, fiscal deficit reduction, and investment attraction, with GDP recorded at 160,045 billion PKR. The budgetary deficit surpassed the target by approximately 20%, and inflation stood at 24.5% compared to a target of 21%.
Farmers produced ten million bales of cotton, falling short of the goal of 12.8 million bales. Exports increased by 10.6%, imports decreased by 2.4%, and FBR tax collection increased by 30.8%. Foreign investment increased by 8.1% to over $1.45 billion; the anti-dollar smuggling measures reduced the dollar rate from Rs326.5 to Rs278.
The GDP growth for the current fiscal year reached 2.38%, and the agricultural sector experienced a growth of 6.25%. The industrial sector by just .21 %, and the services sector by 1.21%. Cement production increased by three percent to reach 41.7 m tonnes. Tractor production increased by 54.6%, and fertilizer offtake surged by 14.5%. SECP company registration declined by 17.4%; agri loans amounted to Rs1635 bn. The fiscal deficit during July-April stood at four and a half percent of GDP. The stock market closed slightly below last year’s highest level of 73,754 points.
The current account deficit during the first ten months of this fiscal year was $538 million, $4.2 billion billion per year (SPLY). The current account surplus in April was $453 million (SPLY: deficit of $57mn). Rice output rose by 34.78% to 9 .87 m tons, whereas livestock showed growth of 3.8%(both figures SPLY).
