Rs 1.315 trillion budget announced: 15-20 percent raise in pensions
ARIF RANA/MUSHTAQ GHUMMAN
ISLAMABAD (June 06 2006): The Minister for State for Finance, Omer Ayub Khan, on Monday announced over Rs 1.315 trillion budget for the fiscal year 2006-07. The allocation for defence has been increased to Rs 250 billion against revised target of Rs 241 billion. Of this, Rs 1.949 billion would be for defence administration, against Rs 486 million, and Rs 248.2 billion for defence services, against Rs 240 billion.

The budget deficit-to-GDP ratio has been estimated at 4.2 percent, and if the earthquake damages were excluded it would stand at 3.7 percent of GDP, claimed Omer Ayub.

The revenue target for CBR has been fixed at Rs 835 billion, showing an increase over previous year's target.

The provinces' share in taxes has also been enhanced to Rs 378 billion.

Many new areas have been brought into tax net. Various sectors would get concession in duty and taxes.

Property business has also been brought into tax net. The buyers and sellers of property will have to pay 2 percent CVT on the sale value. CVT on shares' sale and purchase has also been increased from 0.01 to 0.02 percent.

The public sector development programme (PSDP) has been increased to Rs 435 billion (inclusive of operational shortfall of Rs 20 billion). This shows 50.9 percent increase over 2005-06 development programme.

The current PSDP included Rs 50 billion for rehabilitation and reconstruction of earthquake-hit areas and the provinces' share of Rs 115 billion, Rs 47 billion more than last year.

Privatisation proceeds' target for the next fiscal year has been fixed at Rs 75 billion.

The government will get Rs 140 billion from banks and Rs 239 from external resources to plug the gap in revenue and income.

Defence budget has been increased to Rs 250 billion for 2006-07.

According to State Minister for Finance, the government has estimated Rs 704 billion from revenue receipts, and Rs 16.3 billion from capital receipts. The provinces will generate Rs 85.6 billion income from their indigenous resources.

Property and enterprise would contribute Rs 115 billion in tax collection. The current expenditure has been estimated at Rs 878 billion. Its major share, of Rs 504 billion, will go for debt servicing, which makes 57.3 percent of current expenditure.

The government has granted 15 percent dearness allowance for government employees, 20 percent increase for those pensioners who retired in or before 1977, and 15 percent for those who retired after 1977.

The employees falling in BPS Grades 1-16 would get 50 percent increase in conveyance charges. The overtime charges for drivers, dispatch riders have also been increased by 50 percent. Government employees and pensioners will get the increase from July 1. The industrial workers' profit share has doubled. The minimum wage limit has been increased from Rs 3000 to Rs 4000 pm. Special tax concession has been proposed for women taxpayers.

The profit for the national savings schemes and prize bonds has been increased by 0.5 percent to 1.5 percent.

Tariff for cars import remains unchanged. The deletion programme for local car manufacturers has been replaced with tariff-based system. Duty on CKD and CBU has been cut down from 20 percent to 10 percent and from 60 percent to 30 percent, respectively.

Duty on tractors import has been abolished. Duty on shoes, chemicals, marble, granite and pharmaceuticals has been withdrawn. Duty for aluminium processing, boilers manufacturing, chemicals, CNG dispensers plastic, iron and steel and engineering industry has been lowered to make them competitive in the global market.

Rs 1 billion has been allocated for community development, and Rs 4.73 billion for health related programme.

Excise duty at 15 percent has been imposed on international air tickets. Haj fare/tickets have been exempted from duty. The duty on retail sale of cigarettes has been increased.

Money changers, exchange companies and brokerage of foreign exchange dealers will pay 5 percent excise duty. Cable operators will pay Rs 25 per month per connection. The duty for insurance services has been increased from 3 percent to 5 percent. Financial service providers will pay 5 percent duty.

Duty on import of pesticides has been reduced to 30 percent. Non-chemical fertiliser import has been allowed at zero-rated sales tax. Aircraft of all kinds exempted from sales tax; duty on reclaimed oil reduced. Its importers will pay a uniform duty of Rs 2000. Duty on trains travel withdrawn. Duty-free import of trucks and dumpers of five tons and above allowed. Duty-free import of pulses allowed to bring down prices of these items in the local market for immediate relief.

Many kitchen items have been covered under Prime Minister's relief package.

Rs 2.5 billion subsidy will be give on pulses, Rs 7 billion for sugar. Utility Stores Corporation will expand its network outreach to maximum number of people. District governments will appoint magistrates to check price hike.

A special package has been announced for self-employment. The government will provide loans for the package at concessional rates.

Tax limited on cash withdrawal has been doubled.

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