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Monday, October 3, 2022

Govt Massive reduction in taxes, duties announced in second mini-budget The government wants a Resolution to economic woes of the country

Finance Minister Asad Umer Wednesday presented the “Mini-budget 2019” in the National Assembly. Speaking in the National Assembly, Asad Umar said that it was not a Budget, but a package for economic reforms. “The government wants a Resolution to economic woes of the country”, he said, adding that the government didn’t want next governments to complain about previous government’s [economic] wrongdoings.Asad Umar said that in 6 months, agricultural loans will see an increase of 22 per cent. He said that the government wanted to encourage small businesses, and if they got loans from banks, businesses would flourish.“Hence, the government is reducing the income tax on banks from 39 percent to 20 per cent. Also, banks’ income tax on agricultural loans isbeing reduced to 20 per cent”, he said.Finance Minister said that the government wanted to encourage the people to become regular income tax filers, therefore, the government was abolishing the withholding tax for filers on banking transactions.Announcing the removal of ban on non-filers to purchase cars above 1300cc, the finance minister said they could now buy cars above 1300cc but with an increased tax. The finance minister also informed that the government was bringing a Rs. 5bn revolving fund for a ‘Qarz e Hasna’ scheme.He also said the government was ending the six per cent tax regime on business accounts, whereas the business would now need to submit withholding tax details only twice a year.Finance minister also said that the government was reducing tax on small marriage halls from Rs. 20,000 to Rs. 5000.

 

NO TAX ON INVESTMENT IN RENEWABLE ENERGY PROJECTS:

Umar said that the government was fully focused on bringing investment in the special conomic zone.“We are abolishing all taxes including sales taxes on green field projects”, he said, adding that investment in green field projects will be exempted from income tax for 5 years. “Also, investment in solar energy projects will be exempted from all taxes for five years”, he said.

 

TAXES ON CORPORATE SECTOR, BANKS SLASHED:

He also said the government was ending the six per cent tax regime on business accounts, whereas the business would now need to submit withholding tax details only twice a year.He criticised the former government, saying that its taxation model was akin to “giving a rupee from one hand and taking it from another”. “We are replacing this model with a straight forward taxation approach. From July 1, supertax on non-banking companies is being abolished”, he announced.“Also, we are maintaining the 1 percent annual reduction in corporate income tax”, he said.Umar said that although he did not believe the stock market to be the sole indicator of country’s economic progress, he was happy that the government’s initiatives had helped the stock market go up by 3000 points in last three weeks.

 

PREVIOUS GOVERNMENT LEFT THE COUNTRY IN DEFICIT:

Umar said that the parliament and the constitution had a responsiblity to reduce inequality between the rich and the poor, which was not fulfilled.He said that the government would present a ‘medium-term economic framework’ next week, and hoped that the opposition would give positive suggestions to the government to improve.As the finance minister started his speech, members of the opposition started sloganeering against the government.Responding to opposition’s noise, Umar said he wished the opposition would have called out then finance minister Ishaq Dar when he would read out ‘a pack of lies’ in name of finance bill. He said that the gas sector was never in deficit, however, due to PML-N government’s policies, it was now in the deficit of Rs. 150bn.He further said that the previous government had left the country in the deficit of somewhere between Rs. 2500bn to Rs. 3000bn. Criticising the past rulers over worsening economic crisis, the finance minister said that “these people left the patient in the ICU,” adding that we cannot bring change until narrowing the difference of balance of the payments.“The exports were left at the lowest level; the economy cannot be put back on the track until settling the budget-deficit”, he said Commenting on the savings in the country, Umar said the PML-N left the savings at record lowest level of 10.4 in the country.“Foreign investment cannot be attracted until savings of the country are uplifted”, he said.

 

EARLIER SPECULATIONS ABOUT THE BUDGET:

According to sources, suggestions for an increase and decrease in the customs and regulatory duty of many various goods has been recommended.These goods include luxury items, mobile phones, luxurious cars as well as some machinery and raw materials imports.The main purpose of the package is to create better conditions for investment in a struggling economy that is facing a balance of payments crisis.

According to sources, it has been suggested to increase the duties on imported goods and luxury items. Other items include mobile phones, shampoos, creams and cheese. “It has been recommended to abolish the withholding tax for tax filers whereas 0.6 percent tax on non-filers

will remain intact.” Sources added that, a recommendation has been made to increase the duty

for cars above 100CC by 10 per cent. “The ban imposed on non-filers for not purchasing new cars might be removed as well. However, the ban placed on them for not purchasing new properties will remain intact.” They also said suggestions pertaining to income tax relief per year have been recommended as well, adding that if the aforementioned recommendations are not approved in the mini budget then they will be presented in the yearly budget.

 

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