“The government will announce a tax-free budget and cut income tax and regulatory duty rates in a bid to provide maximum relief for all segments of the society,” said Dr Miftah Ismail on Tuesday.
Talking to the local media, the adviser to Prime Minister on finance told that the government will try to restrict the budget deficit to around 4.5% of total national output in the fiscal year 2018-19 (FY19) in order to keep a balance between the consolidated and expansionary fiscal policy. “But the target was not final and was subject to internal reviews”, he added.
“He vowed to reduce the number of withholding taxes in the new budget that had not contributed to the revenue growth but increased problems for the people. Tax rates for the salaried class would also be considerably reduced”, said Dr. Ismail.
New development projects and a fattened Public Sector Development Programme (PSDP) for 2018-19 will not be announced or launched, told the adviser.
The government has advanced the budget calendar by at least six weeks as it does not want to leave the task of fiscal policymaking with the caretaker setup which will be announced in the first week of June.
Ismail said, “All the export incentive schemes announced in the previous budgets would be rolled back, arguing it was not the government’s job to provide concessionary loans for only a limited segment of the society”.
“In the 2018-19 budget, there would not be any winners or losers and the government would not give preferential treatment to one class over the other”, he added.
“No new taxes will be imposed in the budget, instead, the government will reduce the number of withholding taxes that are contributing very little to the kitty, but are creating huge problems for the people,” said Ismail.
“The government would also rationalize tax rates, adding the current income tax exemption threshold of Rs400,000 per annum would be significantly increased, which would lower the tax burden on the salaried class”.
A question was raised about whether the government would increase the exemption threshold to Rs1 million, Ismail said, “the issue was close to the prime minister’s heart and his decision would be implemented”.