Poorest of the poor top priority: govt

Federal Minister for Finance and Revenue Shaukat Tarin Saturday said that the main focus of inclusive growth-oriented federal budget for the fiscal year 2021-22 is uplift of the poor so that they do not have to wait for the trickledown effect of economic progress. “For the past seventy-four years, the low-income people have been waiting for this trickledown effect, but their condition could not be improved and they remained deprived of houses, businesses, cash and health facilities,” the minister said while addressing the post-budget press conference. He said the government is now directly targeting the poorest of the poor and facilitating them with different initiatives to upgrade their life standard without waiting for the trickledown effect, which he said needed around 20 years of stable economic growth to take effect. The minister said that after achieving economic stability, now comprehensive effort is under progress to lead the country towards sustainable growth for which the country would need to enhance exports. So, the minister said, primary focus of the government is to promote exports and take them upto 20% of the GDP from current 8%, adding that for bringing stability in the country, there is dire need to enhance exports. The minister said for the first time, a growth-oriented budget was presented, including innovative measures to enhance revenue collection, expansion of incentives for exporters and abolishing duty on local industry, including automobile sector. He said a team of renowned economists headed by Dr Ishrat Hussain was set up for identifying bottlenecks that hindered the economic development, besides suggesting measures to overcome the challenges to achieve sustainable growth. He said the economists suggested to increase savings and revenue collection, emphasize on producing imports substitute, and encourage exports by incentivizing local trade and businesses, besides focusing on the agriculture sector to reduce reliance on imported foodstuff. The minister said savings were imperative for creating room for investment. Pakistan’s savings-GDP ratio, he said, was lower than other developing countries, and the government had proposed special measures in the current budget to promote savings. Besides, he said, revenue collection was the second important tool to maintain sustainable growth. Local annual revenue started receding after witnessing 11 to 12 percent growth, which resulted in the availability of less resources for the social sector development. The minister said in order to create resources for fulfilling development requirements as well as to maintain sustainable growth, annual revenue collection was required to grow by 20 percent. Efforts were afoot to increase the revenue at that level within seven to eight years to create abundant resources for the development work. To meet the future development expenditures, he said, the government has set a challenging target of revenue collection of over Rs 5.8 trillion against Rs 4.7 trillion for the current financial year. Innovative ways and means would be used without overburdening the existing taxpayers and introducing incentives for consumers to achieve the realistically aggressive revenue target of Rs 5.8 trillion, he added. Tarin said the Federal Board of Revenue (FBR) had also started data collection for identifying the potential taxpayers, who were eligible to pay tax but were out of the tax net so far. The measure was expected to bring about 312,000 potential taxpayers under the tax net, he added. Moreover, he said, some 10,000 Points of Sale (PoS) were currently under use and their number would be enhanced by bringing 60,000 more business establishments under the system. In order to strengthen the PoS system, he said, incentives and prize schemes would be announced for the general consumers that would help in documentation of the economy. Revenue collection of about Rs 100 to150 billion was expected through the PoS system, he hoped. The minister said for bringing different industries under the tax net, the scope of track and trace system would be expanded, which would not only help enhance the revenue collection, but also promote the tax compliance culture in the country. He said the government was keen to develop the agriculture sector as it would help check the rising inflation. Special measures were announced in the budget for the uplift of sector. The government in its current budget, he said, had also suggested steps to promote exports that would help reduce pressure on the foreign exchange reserves, besides developing the local industrial sector. The special economic zones being set up under the China-Pakistan Economic Corridor would also help in local industrial development and create job opportunities for the skilled and semi-skilled work force, he added. Special tax relief was suggested on the import of plant and machinery that would also help in attracting the foreign investment, the minister said. Meanwhile, the minister clarified that no new duties would be imposed on telecom and internet usage as was mentioned in the budget speech that Rupee 1 per call if the duration exceeds three minutes, Rs 5 per GB for internet usage and 10 paisa on each SMS. As the cabinet did not approve the duties hence the same would not be part of the budget, he added. To another question on rising inflation, Tarin said the government was striving to eliminate the role of middleman which would not only end exploitation of farmers but would also help to bring down inflation. Speaking on the occasion, Khusro Bakhtiar highlighted the importance of maintaining the momentum in large scale manufacturing (LSM) growth, which grew by 9 percent during the current fiscal year (2020-21). He said as electricity and gas were important for the industry, the government would provide subsidy of Rs 42 billion on the two utilities, besides reducing duties on import of industrial raw materials. Those using extra electricity would be given tariff relaxation while peak-hour tariff rates would also be eliminated, he added. He said the government would bring the production of industry in its existing capacity to promote growth. Razak Dawood said the government had adopted a two-pronged strategy to enhance exports and promote Pakistan-made products. He said the government was focussed on both traditional exports as well as innovative trade, including engineering, pharmaceuticals, information technology and food processing. He said during the current year, the pharmaceutical sector performed well and efforts would continue to promote imports of this sector in upcoming year. Likewise, he said, the textile sector also performed well as its exports reached $15.5 billion, which would further mount to $20 billion next year. Providing details of overall exports, the advisor said the exports during the current year would touch $30 billion, including $25 billion of merchandize and $5 billion of services, and would be enhanced up to $35 billion next year.