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Balanced Budget 2000 :)

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    Balanced Budget 2000 :)

    Income tax relief for salaried class

    •Wealth tax abolished
    •Duty on newsprint slashed
    •Measures to promote information technology
    •Profit rate on savings schemes cut Rs700bn outlay for 2000-2001: Allocations for debt servicing, defence reduced

    Finance Minister Shaukat Aziz on Saturday presented a relief-cum-investment-oriented but modest budget of about Rs700 billion for 2000-2001, managing for the first time in many years a decrease in the allocation for debt servicing, a significant cut in the defence share and at the same time increasing the development budget by over 19 per cent.

    Describing it as the first part of a three-year (2000-2003) framework, the minister on TV and radio proposed a budget with an overall deficit of 4.6pc (Rs162 billion) of the GDP.

    He hoped to keep the budgetary deficit well below 5pc of the GDP on the assumption that in the next year the CBR revenues would increase by over 24pc from Rs352 billion to Rs438 billion, and the expenditure would expand by only 2pc from Rs566 billion to around Rs578 billion.

    In the next three years the finance minister hoped to achieve an annual average growth rate of 6pc, an inflation rate of 4pc, an investment rate of 18pc, budgetary deficit in the final year at 3.2pc, a fall in the current account deficit to half a per cent of the GDP from the present 2.4pc, and an increase in the foreign exchange reserves equivalent of 12 weeks import bill from the present four weeks.

    He announced abolition of wealth tax from the next year and proposed reduction in the number of other taxes and their rates.

    To provide relief to the salaried class, the minister proposed reduction of income tax rates to the tune of 80pc for those earning lesser amounts and 5pc for those who are earning higher salaries. A 50pc cut was proposed in the tax on the incomes of researchers and teachers.

    The minister identified the debt burden as the foremost problem facing the country as the total public debt at the end of this month would go up to Rs3,200 billion of which 56pc was foreign. On the other hand, he said, the tax base was extremely narrow with a tax to GDP ratio of 13pc compared to 18pc in countries at our level of development.

    The computer training institutes set up between 1997 and 2005 have been exempted from paying income tax. Software exports have been exempted from the minimum income tax rate of half a per cent.

    The overall expenditure for the next year at Rs698 billion is only about 4.7pc more than the revised budget for the current year at about Rs637.70 billion. If adjusted against the current rate of inflation the size of the new budget in real terms seems to have been kept almost at par with the size of the current budget.

    The current expenditure for 2000-2001 has been estimated at Rs577.6 billion, showing an increase of 2.2pc over revised estimates of 1999-2000. This would mean that in real terms (adjusted against the current rate of inflation) the size of the current budget next year would be significantly smaller than the size of the revised current budget for the outgoing year.

    Debt servicing for the next year has been estimated at Rs305.6 billion, indicating a 2.6pc decrease over revised estimates for 1999-2000 of Rs313.7 billion. The domestic debt servicing is estimated to decrease by 4.6pc, foreign debt servicing by 8.9pc and foreign loan repayment would decrease by 5.1pc against the revised estimates of 1999-2000.

    Defence expenditure in 2000-2001 at Rs133.49 billion has been slashed by almost Rs10 billion but at the same time an expenditure of Rs26.1 billion for military pensions has been transferred to the head of running civil government. As a result, the expenditure under this head at Rs80.2 billion has increased by 67.4pc in 2000-2001 over the revised budget for 1999-2000.

    The resource availability for the next year has been estimated at Rs700.2 billion, showing an increase of a modest 9.7pc over the revised estimates for the current year, and net revenue income for the year at Rs412.1 billion also shows an increase of only 9.3pc over the revised estimates for 1999-2000.

    The capital receipts (net) for 2000-2001, however, show a substantial increase of 25.8pc at Rs78 billion, but on the other hand receipts from external sources are estimated at Rs178.5 billion, showing a decrease of 3.5pc over the budgeted estimates for 1999-2000.

    The share of provinces from the federal receipts next year would see a whopping increase of almost Rs40 billion at Rs182.48 billion against Rs142.28 billion of revised estimates for the current year.

    While the report of the pay and pension committee is being awaited, the government servants from grade 1-16 will be allowed to draw one month's salary up to Rs2,000 on the occasion of their religious festivals.

    The government proposes to cover part of the losses suffered by the victims of Taj Company and the Cooperatives from the funds collected by the NAB from corrupt people.

    In the next three years, the minister hopes to decelerate the growth of public debt through stringent fiscal policy that attempts to reduce the budget deficit, broaden tax base without burdening people with high incidence of tax, institute a transparent system of expenditure control, significantly increase the share of social sectors' allocations and poverty reduction programs, encourage and facilitate investment in industry, particularly small and medium industry, encourage exports, particularly manufactured and non-traditional, effect savings and reconstruct and revitalize institutes of governance.

    The second most important area of reforms of the government, according to the finance minister, is the privatization and in this connection a law is being promulgated that would guide the process of privatization.

    A timetable has been drawn by the Privatization Commission to privatize banks and other public sector assets in oil and gas, power and industrial sectors. Several major transactions relating to the PTCL, banks and industrial units, including PSO, will be ready towards the end of the year.

    The minister announced the formation of committee comprising himself, the commerce minister, NAB chairman, chief of staff of the chief executive and principal secretary of the CE which would deal with all cases of corruption relating to businessmen.

    The minister also announced a comprehensive package of incentives for the promotion of agriculture, small and medium industry, information technology, capital market, export and the financial sector.

    Visite also:

    Originally posted by Aawara Baadal:
    a significant cut in the defence share
    There is no cut in defence. The pensions of military employees is accounted in civilian sector and not military sector. They used to be calculated in military sector till now. In fact there is 10% increase in defence.

    No cut in Pakistan defence budget, says minister

    ISLAMABAD: Pakistani Finance Minister Shaukat Aziz today said he had not slashed the defence budget and the reduction reflected in this year's outlay was due to shifting of military pensions to the civilian administration budget,reports PTI.

    The military spending for the fiscal year to June 2001 has actually been increased by about 10 per cent, Aziz clarified in his post-budget press meet.

    The national budget unveiled by Aziz in a late night broadcast yesterday showed the military government capped defence spending at 133.5 billion rupees against 143.4 billion rupees for the outgoing fiscal year to June 30.

    "We do not want an arms race with India but it is necessary to maintain a credible defence," Aziz said. Economists said the eight-month old government of military ruler General Pervez Musharraf presenting its first budget transferred the expenditure of 26.1 billion rupees for pensions to ex-servicemen to a civilian allocation.

    "In many countries, defence pensions do not fall in the defence budget," Finance Secretary Yunis Khan said.

    "There is no game plan," he said adding the government move was purely an accounting procedure.

    [This message has been edited by ZZ (edited June 18, 2000).]


      should go to politics section.