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Former finance minister Asad Umar, who made a speech at the extra-budgetary consultation and scheduled conference in Islamabad (02.04.19) indicated full agreement with thoughts on “elite capture” and “inheritance tax”.
The financial crisis may be the biggest headache for the new Prime Minister of Pakistan. Whether the emergency budget can effectively improve the deficit and trade deficit, then persuade the IMF to provide assistance is still unknown.
On September 19, 2018, the new Pakistani government led by Imran Khan took office in a few weeks and launched an emergency budget to solve the budget deficit and trade deficit problem through increasing tax and savings. He aimed to relieve the financial situation.
Imran Khan believed these measures are expected to improve Pakistan’s fiscal position to meet the conditions needed to obtain assistance from the International Monetary Fund (IMF). Many economists expect that Pakistan needs assistance from the IMF. The new Pakistani government has expressed that seeking help from the IMF is one of the many options, which the government has considered it to solve its financial difficulties so far. Debt inflation, extremely low foreign exchange reserves and increased trade-imbalances have left the country in financial difficulties.
Government of Pakistan is considering to increase the salary and pension of government employees of Pakistan
According to the British ‘Jane’s Defense Industry’ report on April 30, 2018. In April 2018, Pakistan announced that the defense budget for 2018-2019 was about 1.1 trillion rupees. And the defense budget for the new fiscal year has increased by 20% year-on-year, accounting for the government’s new wealth. 19% of the total annual budget, accounting for about 3.4% of GDP.
Human cost expenditure including military salaries but no pension, about 422.9 billion rupees, substantial growth of 31% year-on-year. The tangible equipment expenditure including the procurement of weapons and equipment is Rs. 283.3 billion, a year-on-year increase of 16%. The operating expenses of the armed forces were Rs. 253.4 billion, a year-on-year increase of 12%. Construction project expenditure is Rs. 141.2 billion, a year-on-year increase of 10%. The salary of federal employees and pensions have increased by 10% (about 85% of the total number of pensioners).
Minimum pension increased from 6,000 to 10,000 rupees, 10% temporary relief allowance for civil and armed forces employees. Housing rent limit and housing rent allowance have increased by 50% as 1.2 billion rupees are dedicated to providing advance payments to government civil servants.
The features of the mini budget 2019 in Pakistan
Mini budget 2019 has announced by the then federal minister for finance Asad Umar in the National Assembly. The Minister began his speech by declaring the Mini-Budget 2019 tax on income from loans to the Small Medium Enterprises (SMEs) 100% tax free for investment in alternate energy sources! All machinery imports for renewable energy (solar and wind) power plants will be tax, customs and levies free. 100% tax on investment in alternative energy! All machinery imports for renewable energy will be tax-free, customs and tax. SMEs sector loan income tax will be reduced to 20% loans will be reduced to 20% to provide low-income housing. For small wedding halls under 500 square feet, the tax rate is reduced to 5,000 rupees.
Newsprint, import elimination tax, mobile card restores 30% tax from July 1st, non-banking companies canceled super taxes continue to reduce corporate income tax by 1% per year. The tax rate for agricultural diesel engines is reduced to 5%.
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The UMT Business School and the School of Accounting organized the 2018-19 Federal Budget and Budget Conference on the theme of “Pakistan Tax Reform”, inviting all stakeholders to share their thoughts and suggestions. Although the defense budget of the new fiscal year has not yet announced the budget allocation of the three armed forces. But in general, the budget allocation of the Pakistani Army is about: Army, 50%; Air Force, 20%; Navy, 10%.
The rest of the funds will be allocated to the Ministry of Defense and service agencies including the Intelligence Bureau. In addition, despite the mention of the new fiscal year’s defense budget, the government will allocate 2.8 billion rupees to the Karachi Shipyard and Engineering Works Limited (KSEW) for modernization.