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Mini-budget to be announced next week, Govt aims to cut privileges in mini-budget

A rise in regulatory and customs duties is amongst the recommendations which will allow 20 percent increase in the revenue collection for the government in its first year of power.

ISLAMABAD: The government has opted to delay the National Assembly session it had called on Friday till next week in lieu of Kulsoom Nawaz’s funeral to be held the same day.

The mini-budget set to be announced next week is expected to withdraw the tax-free privileges being used by the governor, federal ministers and the president reports.

And the decision to present the revised Finance Bill on Friday has been postponed to Tuesday (September 18th), said the Finance Minister Asad Umar.

The newly installed PTI government is considering presenting a revised budget for FY19 in the parliament to adjust it with macroeconomic realities.

It is going to slash the federal Public Sector Development Programme (PSDP), revise current expenditures and recommend new taxation measures to rein in the budget deficit.

The previous PML-N government had announced a budget for FY19 which estimated budget deficit at 4.9 percent of gross domestic product or Rs1.88 trillion.

However, the PTI government has assessed the budget deficit could surpass the Rs2.4 trillion mark if proper actions weren’t taken.

Also, the revenue collection has been impacted because of under-invoicing, smuggling and misdeclaration of goods at the import stage.

Currently, the Inland Revenue Services do not have the powers to undertake an audit of taxes amassed at the import stage, because the imports are managed by the customs department.

Around 45 percent of overall taxes are collected at the import stage, which the appropriate authorities believe can be raised provided if under-invoicing is addressed properly.

The government may recommend to rollback tax benefits to retrieve Rs75 billion revenue losses in lieu of the previous government’s decision to provide it to individuals.

A rise in regulatory and customs duties is amongst the recommendations which will allow 20 percent increase in the revenue collection for the government in its first year of power.

Sources disclosed “In line with its policy to crackdown against a lavish lifestyle of government functionaries being enjoyed at the taxpayers’ expense, the finance ministry may withdraw perquisites being availed by heads of the state, provinces and federal ministers.”

The sources said the withdrawal of these perks would be symbolic since it wouldn’t have a major impact on the revenues.

However, sources added it was necessary before the government requested people to pay taxes.

Perks being availed by the provincial governors, federal ministers and the president are going to face the axe, according to sources.

As per Section 51 of the Income Tax Ordinance (ITO) 2001, President of Pakistan, provincial governors and services chiefs are authorized to get premises free of rent as a place of residence given by the government.

Likewise, services chiefs, provincial governors and corps commanders are qualified to avail free conveyance and sumptuary entertainment allowance provided by the government.

And the cost of these facilities isn’t included in their tax calculations.

Section 53 of ITO 2001 allows federal ministers to avail rent-free accommodation, house-rent allowance, free conveyance and sumptuary allowance paid for by the government.

The newly installed government wants to withdraw these tax-free perks available to the ministers.

And a recommendation has been put forth to take back tax-free privileges available to judge of high courts and the Supreme Court.

The judges are permitted to use official cars which are maintained on government expenditures and their superior judicial allowance is also tax-exempt, according to ITO 2001.

Furthermore, the transfer allowance payable to a high court judge is tax-exempt.

Under ITO 2001, the apex court judges are entitled to free services of a driver, 1,000 free local telephone calls per month, 1,000 units of electricity and 25hm3 of gas a month, including a free supply of water and 200 litres of petrol a month.

And all these privileges are tax-free during the service of a judge and after his retirement, as per ITO.

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