ISLAMABAD(National Times)- Finance Minister Muhammad Aurangzeb on Saturday termed the proposed budget for FY26-27 as a significant move towards setting the country on the path of economic growth.<\/p>\n\n\n\n
\u201cIn this budget, we have made significant progress in that direction of travel [towards economic growth] that we spoke earlier about,\u201d he said at the outset of his media briefing in Islamabad.<\/p>\n\n\n\n
The minister affirmed that the government has \u201cmade comprehensive efforts to create an enabling environment\u201d for an export-led growth, recalling the abolishment of an advance tax.<\/p>\n\n\n\n
He stressed the decision to reduce the super tax for businesses earning more than Rs500 million, terming it a \u201cvery meaningful direction of travel\u201d.<\/p>\n\n\n\n
During the budget presentation<\/a> yesterday, the finance minister announced that super tax would be abolished for businesses earning between Rs150m and Rs500m annually, and it would be reduced from 10pc to 8pc for businesses whose income exceeded Rs500m.<\/p>\n\n\n\n Aurangzeb said he proposed the abolishment of the super tax for \u201call exporters\u201d, as per the directives of Prime Minister Shehbaz Sharif.<\/p>\n\n\n\n He further noted the matter also pertained to \u201cfinancing rather than just taxation\u201d. He added that an additional subsidy of Rs70 billion has been proposed in the budget to take the Export Refinance Scheme (EFS) \u201cto a different level\u201d.<\/p>\n\n\n\n \u201cMacrostability is basic hygiene. It is as simple as that. If there would be forex reserves, interest rates, foreign exchange, and consistent policies in this country, then local investors would come first, followed by foreign investors,\u201d Aurangzeb remarked.<\/p>\n\n\n\n Referring to the freeze on provincial development allocations, the finance czar lauded the provinces for stepping up<\/a> and \u201chelping us in some of the most pressing needs\u201d.<\/p>\n\n\n\n \u201cSome of those have been reflected in the defence budget<\/a>,\u201d he said, adding that the arrangement was expected to remain in place for the next three years.<\/p>\n\n\n\n On another question, Aurangzeb asserted that the issue was \u201cnot a lack of resources\u201d, noting that Rs4.3bn had been allocated for the uplift plans for the entire country.<\/p>\n\n\n\n He emphasised the need to move towards the public-private partnership (PPP) model, so that the private sector could be promoted.<\/p>\n\n\n\n Asked about rumours that the Board of Investment (BoI) and the Special Investment Facilitation Council (SIFC) merger, the minister said the merger of various ministries was part of the government\u2019s rightsizing exercise.<\/p>\n\n\n\n \u201cAs far as BoI and SIFC are concerned, duplication can be seen in them; both have similar objectives of investment and facilitation. Therefore, a joint secretary was appointed, but it is best if foreign investors use and work with a one-window [system],\u201d he said.<\/p>\n\n\n\n The finmin said Prime Minister Shehbaz Sharif has \u201cmade the principal decision to merge them\u201d, with the process yet to be determined.<\/p>\n\n\n\n On the 7pc increase<\/a> in salaries and pensions for all government employees, Aurangzeb said the benchmark was determined based on the inflation index and termed the raise \u201csatisfactory\u201d considering the tax relief.<\/p>\n\n\n\n On taxation, the finance czar emphasised the aspects of \u201cboth deepening and broadening\u201d the revenue collection.<\/p>\n\n\n\n Affirming that digital monitoring and other measures were already leading to additional revenues, he noted that a \u201cnew tax model\u201d presented in the parliament yesterday was in design.<\/p>\n\n\n\n \u201cWe want to take this towards automation and AI, and reduce human intervention,\u201d he said, mentioning that the retailers\u2019 scheme has been proposed to widen the tax base.<\/p>\n\n\n\n Noting that questions had been raised about economic growth, rather than stabilisation, Aurangzeb asserted: \u201cWe have fully utilised the fiscal space available to us. There is more to do [\u2026] The feedback we have received so far is that we have set out on the path to economic progress.\u201d<\/p>\n\n\n\n Responding to a question, the finance minister clarified that the petroleum levy was not being increased.<\/p>\n\n\n\n However, he acknowledged that the government \u201ckeeps interchanging the amount between petrol and diesel\u201d, but there was no proposal to increase it.<\/p>\n\n\n\n About the recent surge in oil prices, Aurangzeb said that the impact of the Middle East conflict \u201cwill spill over into the next fiscal year\u201d.<\/p>\n\n\n\n \u201cWhether it is the supply or the prices, we have built in that redundancy into our fiscal position for the next year,\u201d he added.<\/p>\n\n\n\n Replying to a query, the finance minister pointed out the abolishment of taxes on contraceptives and sounded the alarm on Pakistan\u2019s high population growth rate<\/a>.<\/p>\n\n\n\n \u201cIf today, with a population of 250m, you are highlighting there is child-stunting and learning poverty, which is primarily girls out of school, then can you imagine what will happen if we reach 300m to 400m?\u201d he said.<\/p>\n\n\n\n Terming it an \u201cexistential issue\u201d, he affirmed that the government was working on a comprehensive plan.<\/p>\n\n\n\n \u201cWhen the next NFC (National Finance Commission) award<\/a> is allocated, this particular allocation driver has to be reviewed and has to change,\u201d he said, referring to population.<\/p>\n\n\n\n At one point during the press conference, responding to speculations before the budget was proposed \u2014 such as an increase in the sales tax \u2014 Aurangzeb quipped that the reporters should hold their sources \u201caccountable\u201d for the incorrect information they were given.<\/p>\n\n\n\n He also took exception to earlier reports of imposing taxes<\/a> on solar equipment. \u201cThis was never part of the discussion.\u201d<\/p>\n\n\n\n Speaking about tariffs, the finance minister noted that the government was in the second year of the five-year plan<\/a> \u201cin terms of bringing the cost down in terms of intermediate goods and the raw material\u201d.<\/p>\n\n\n\n He stressed the importance of reducing the \u201ctrade deficit for goods\u201d, adding that the services exports, particularly IT, were \u201cbecoming more and more important as we go forward\u201d.<\/p>\n\n\n\n He said IT exports were expected to reach $4.5bn<\/a> and that the overall \u201cgoods and export data for next year is very good\u201d.<\/p>\n\n\n\n \u201cThis is why the government has announced to maintain the 0.25 per cent Final Tax Regime (FTR) as per the discussions that came through the IT industry, freelancers and PASHA,\u201d he said.<\/p>\n\n\n\n Aurangzeb emphasised that the government tried to \u201cprovide relief to the lowest segments of the salaried class\u201d, recalling that the slabs of 5pc and 15pc were reduced to 1pc and 13pc, respectively.<\/p>\n\n\n\n Meanwhile, FBR Chairman Rashid Mahmood Langrial said the \u201centire budget is a budget for export-led growth\u201d.<\/p>\n\n\n\n Noting that there was a limited market within Pakistan to sell locally-manufactured goods, he said, \u201cUnless you sell those goods abroad, poverty will not decline in Pakistan.\u201d<\/p>\n\n\n\n He observed that there were two sets of people for reducing poverty, with the Benazir Income Support Programme (BISP) addressing the set that cannot become a part of the economic activity and \u201cwould be left behind in any system\u201d.<\/p>\n\n\n\n Aurangzeb noted that agricultural credit and financing had risen by 15pc year-on-year (YoY) and the overall agri-financing has crossed Rs2 trillion. He highlighted that the Zarkhez-e Scheme for small farmers was collateral-free and was \u201cmoving in the right direction\u201d.<\/p>\n\n\n\n The overall size of the Prime Minister\u2019s Youth Business & Agriculture Loan Scheme (PMYB&ALS) was Rs262bn, out of which Rs125bn were allocated for agriculture, he noted.<\/p>\n\n\n\n The finance czar underscored the need for \u201cvalue addition\u201d in the equipment imported, such as combined harvesters, tractors and centrifugal pumps. \u201cThe customs duties and regulatory duties on all these things were reduced to zero,\u201d he added.<\/p>\n\n\n\n Speaking about the construction sector, the minister said housing and construction \u201cplay a very important role\u201d for a \u201cpro-business and pro-growth direction\u201d of the economy.<\/p>\n\n\n\n In his remarks, Tarar observed that 12 industries \u201cfeed into the housing sector\u201d.<\/p>\n\n\n\n He mentioned Prime Minister\u2019s Apna Ghar Programme, for which additional allocations have been proposed in the budget.<\/p>\n\n\n\n Speaking during the press conference, Minister of State for Finance Bilal Azhar Kiani termed the proposed financial plan a \u201cbudget of the salaried class, industrialist, exporter, construction sector, the person who does not have the resources to build their house\u201d.<\/p>\n\n\n\n Acknowledging that the salaried class was at the top of the list of those bearing the burden of taxation, he said that relief was given this year in such a way that \u201cevery person would feel a significant reduction in that burden\u201d.<\/p>\n\n\n\n Replying to a question, Kiani highlighted that the government had prioritised the lowest-income slabs \u2014 those earning up to Rs2.2m \u2014 and provided them relief.<\/p>\n\n\n\n Kiyani said that the abolishment of the advance tax for exporters and six slabs of the super tax were the \u201cprimary demands\u201d of the exporters and the formal industry.<\/p>\n\n\n\n The state minister affirmed that the government heard the concerns of all chambers of commerce and addressed them.<\/p>\n\n\n\n He further noted that some taxes had notable importance for the social sector, such as taxes on sanitary pads and contraceptives, which would be abolished.<\/p>\n\n\n\n Also speaking at the press briefing, Information Minister Attaullah Tarar noted that the space for relief was \u201cnot created overnight\u201d.<\/p>\n\n\n\n He also hailed the Federal Board of Revenue (FBR) reforms as \u201cunprecedented\u201d. \u201cIt would not be wrong for me to say that the entire structure of FBR is free of references and political influence,\u201d he asserted.<\/p>\n\n\n\n Tarar highlighted the government\u2019s steps to improve transparency and curb leakages, particularly in the sugar industry.<\/p>\n\n\n\n<\/a>Taxation<\/h2>\n\n\n\n
<\/a>\u2018Entire budget is for export-led growth\u2019<\/h2>\n\n\n\n
<\/a>Focus on agri, construction<\/h2>\n\n\n\n
<\/a>Space for relief \u2018not created overnight\u2019<\/h2>\n\n\n\n