Pakistan budget-Fiscal year 2013-2014: Discussions

[Jango]

@hasnain0099, what's your opinion on the budget now?

 

[W.11]

As a businessman, I should be happy. But Why am I feeling for the aam aadmi?

the country is not made by business men, its made by common admi, and common admi is the consumer, without common admi, your business will be nothing

 

[Tiger Awan]

@Tiger Awan I saw the program again he said he would get rid of circular debt but how he didn't told that ?

sorry for wasting your time then, i thought he did

The govt will actually sell bonds to banks etc with a little interest on it. That money will be used to pay the circular debt while the bonds will be paid of later

@hasnain0099 can explain better, I am not good in these things

Now @Tiger Awan's reply will be

What BS?

Don't read pml-n manifesto..

When I write BS reply me there. or you dont have anything to reply there ???


and Pmln should not have done this if they had said otherwise in manifesto

Chalo Shabaash..Ab poori Qaum Sher baney...!

Bnana parey ga agar halat ka muqabla karna hai

 

[HRK]

An interesting slid hope fellow Indian member will enjoy it......

 

[Tiger Awan]

Farrukh Saleem
ISLAMABAD: For the first time in history, we have a budget with a trillion rupee Public Sector Development Programme (PSDP). That’s a trillion rupees worth of schools, hospitals, motorways, link-roads, electricity grids and dams. That’s Rs6,000 for every man, woman and child on the face of this country. That’s Rs30,000 for every Pakistani family.
For the first time in history, we have a budget where the government’s expenditure stream is not much different from the previous budget. For the first time in history, the allocation for the PM’s Office has gone down from Rs720 million to Rs500 million, a 45 percent year-over-year cut. For the first time in history a prime minister has voluntarily given up his Rs42 billion discretionary fund (and abolished discretionary funds of the federal ministers). Two other first-timers are the shaadi tax and the drama tax.
The budget also has a sign of political maturity as in the past governments have always abandoned schemes-whether good or bad-of their predecessors. The Benazir Income Support Programme of targeted subsidies stays. I only wish that we had retained the original name and made it conditional as oppose to keeping it as an unconditional subsidy.
For the first time since the nationalization programme began back in the January of 1972 a serious attempt to fill the Rs500 billion hole in the so-called Public Sector Enterprises is now under way. For the first time in four decades, a political will to stop uninterrupted bleeding has cropped out almost from nowhere. Is the will accompanied by capability? Only time will provide the answer.
Life being what it is, the budget also has dreams, bubbles and castles in the air. Bringing down the fiscal deficit from Rs2.2 trillion to Rs1.6 trillion is one of them. Others include the floatation of dollar bonds in the international markets, increasing the investment-to-GDP ratio to 20 percent, increasing international reserves by 100 percent and keeping inflation in single digit.
There’s good news on higher education—an allocation of Rs57 billion and a 50 percent jump in the number of scholarships. There’s good news on circular debt as well—a time frame of 60 days and a rumoured Rs400 billion T-bill auction to wipe off the entire debt.
Our minister of finance may not make favourable headlines, but he has made history. The document that he has presented makes him a dreamer and an artist —two in one. Someone intelligent once said, “An artist is a dreamer consenting to dream of the actual world.”

Historic budget unveiled - Notlurking.com

 

[SBD-3]

sorry for wasting your time then, i thought he did

The govt will actually sell bonds to banks etc with a little interest on it. That money will be used to pay the circular debt while the bonds will be paid of later

@hasnain0099 can explain better, I am not good in these things

I have explained it in detail here
http://www.defence.pk/forums/national-political-issues/257774-govt-vows-end-rs-500bn-circular-debt-60-days.html#post4395086
If doubts remain still, I ll be glad to explain it further

 

[Jango]

I have explained it in detail here
http://www.defence.pk/forums/national-political-issues/257774-govt-vows-end-rs-500bn-circular-debt-60-days.html#post4395086
If doubts remain still, I ll be glad to explain it further

But yesterday, Dr Farrukh Saleem said that who will be willing to buy our bonds?

 

[Leader]

PEOPLE WHO VOTED PMLN ARE NOW SUFFERING, WATCH PEOPLE

just some random noora opinions for the pmln budget

 

[S.Y.A]

government servants are already MOST of them incompetent! not all of them! and increasing their salary next year dar said. and he reduced corporate tax for 2 reasons:

1) encourage business & FDI

2) A progressive corporation will in THEORY hire more staff.


look I don't think this budget is as bad given the situation PPP left us in!


come on let's be realistic we didn't expect much from this budget anyways. I am just looking at a year ahead if FDI increases & load shedding decreases! and inflation is controlled!


BUT the most impressive thing is


the cutting of GOVERNMENT & PM cots which account to 40 billion rupees!



lol ghareeb kaa bacha drinks the milk of mother or goat! but not boxed powder milk! bhai tough times bro got to look long term in a year

just watched on record on ary news, you should probably watch it too, and see for yourself how the poor are going to suffer

Farrukh Saleem
ISLAMABAD: For the first time in history, we have a budget with a trillion rupee Public Sector Development Programme (PSDP). That’s a trillion rupees worth of schools, hospitals, motorways, link-roads, electricity grids and dams. That’s Rs6,000 for every man, woman and child on the face of this country. That’s Rs30,000 for every Pakistani family.
For the first time in history, we have a budget where the government’s expenditure stream is not much different from the previous budget. For the first time in history, the allocation for the PM’s Office has gone down from Rs720 million to Rs500 million, a 45 percent year-over-year cut. For the first time in history a prime minister has voluntarily given up his Rs42 billion discretionary fund (and abolished discretionary funds of the federal ministers). Two other first-timers are the shaadi tax and the drama tax.
The budget also has a sign of political maturity as in the past governments have always abandoned schemes-whether good or bad-of their predecessors. The Benazir Income Support Programme of targeted subsidies stays. I only wish that we had retained the original name and made it conditional as oppose to keeping it as an unconditional subsidy.
For the first time since the nationalization programme began back in the January of 1972 a serious attempt to fill the Rs500 billion hole in the so-called Public Sector Enterprises is now under way. For the first time in four decades, a political will to stop uninterrupted bleeding has cropped out almost from nowhere. Is the will accompanied by capability? Only time will provide the answer.
Life being what it is, the budget also has dreams, bubbles and castles in the air. Bringing down the fiscal deficit from Rs2.2 trillion to Rs1.6 trillion is one of them. Others include the floatation of dollar bonds in the international markets, increasing the investment-to-GDP ratio to 20 percent, increasing international reserves by 100 percent and keeping inflation in single digit.
There’s good news on higher education—an allocation of Rs57 billion and a 50 percent jump in the number of scholarships. There’s good news on circular debt as well—a time frame of 60 days and a rumoured Rs400 billion T-bill auction to wipe off the entire debt.
Our minister of finance may not make favourable headlines, but he has made history. The document that he has presented makes him a dreamer and an artist —two in one. Someone intelligent once said, “An artist is a dreamer consenting to dream of the actual world.”

Historic budget unveiled - Notlurking.com

eff the motorways, they are not going to provide cheap petrol, oil, sugar to a poor family, and the laptops will certainly not do so too, and how does 10,000Rs to MS grad is goin to help him(and that too under 25 years, so nothing for doctors, or o'level grads; who have to study an extra year)

 

[SBD-3]

@hasnain0099, what's your opinion on the budget now?

Well for the prospective of an economist, something inevitable, With humongous debts we could always expect a "tougher" budget. Strictly speaking from fiscal point of view
Postives:
1-The total deficit of budget 2012-2013 is around 1.6 Trillion but if I look at the debt service alone, the figure is around 1.12 trillion. So the good thing is that expect from debt service, government didn't create excessive deficit.

2-Generous allocation towards development expenditure. Though the room (Fiscal space in economic terminology) was very tight but Ishaq Dar sb indeed made a valuable effort by exchanging non-development expenditures with development expenditure. The thing to note here is that though the deficit could also be curtailed by keeping development expenditures on their current level, but our economy needs a kick which would be provided by development expenditures.

3-Good allocation towards power sector (220 billion).

4- Taxing the untapped real estate sector.

5- Rationalization of tax slabs. Previously, the tax rate above 2.5 Million a year was flat 25%. This meant rich (around 2.5 and above) and utlra rich (say 7 Million and above) were being taxed at same rate which was sort of a concession to ultra rich people. Now with the introduction of two new slabs, this anomaly has been removed to great extent.

6-Income support levi (a minute 0.5%) on movable assets would help replenish the income support fund thus allowing government to directly target the most poor sections and dragging them out of the poverty line artificially.

7- Introduction of WHT on car purchases would encourage people to enter tax net.

8- Charge of sales tax on electricity of small manufacturing units plus the increased sales tax on unregistered persons is also an effort to bring them into tax net. By registering for sales tax, the small units would be able to adjust their sales tax paid on utilities and inputs against the sales tax retrieved on the output.

Negatives-
1- Inflationary impact of taxes (of course we can't avoid it) but the way some so called "tax experts" on media are calling for huge 10-15% increase in prices is also overblown. They are errorously mixing the concept of sales tax with Value Added Tax (a debate for another time). Roughly speaking VAT is charged on every step of production while sales tax is charged only on final product price. So if the sales tax increase by 1%, the final prices will increase only by 1% (unlike VAT where the effect will be much larger) but nevertheless it is a regressive tax.

2- Higher subsidy figure
Still 270 Billion PKR were offered in subsidy. Subsidies create economic inefficiencies and actually direct the tax payers money to the advantages of certain groups (growers, manufacturers, users etc) The subsidy should only be allowed where absolutely necessary (like to relive low income groups). This subsidy figure could be further rationalized and spent upon public works.

3- Still very high military budget (I know its very controversial) but military could also introduce some austerity measures for the time being and thus help government to free some more resources for development spending. I am saying this because we need every penny that we can get and allocate it to development expenditures. We desperately need good growth and fast. So military could also send a good signal to public that it supports an economically stronger Pakistan. The procurement budget may be maintained since it is crucial for maintaining combat capabilities but some effort could be made to curtail the current expenditures by introducing austerity.

3- Very high debt service. humongous 1,12 trillion of debt service was the most intriguing issue. Had PPP managed the finances appropriately we could allocate this amount to development spending.

4- Another controversial view. HEC's funding could be rationalized. I know its controversial but at the moment we need an expanding industry. Because if we don't have industrial capacity amid economic growth, no matter how much educated human resource we produce, we will only end up with more unemployment (Case in point: Srilanka). So well one may disagree with my view but at initial stage, we should spend as much possible on ensuring higher economic growth.

Well that was my short view on the budget. Feel free to disagree and correct me where necessary

 

[Jango]

2- Higher subsidy figure
Still 270 Billion PKR were offered in subsidy. Subsidy create economic inefficiencies and actually direct the tax payers money to the advantages of certain groups (growers, manufacturers, users etc) The subsidy should only be allowed where absolutely necessary (like to relive low income groups). This subsidy figure could be further rationalized and spent upon public works

Isn't the subsidy being made targeted? Atleast the electricity subsidy?

3- Still very high military budget (I know its very controversial) but military could also introduce some austerity measures for the time being and thus help government to free some more resources for development spending. I am saying this because we need every penny that we can get and allocate it to development expenditures. We desperately need good growth and fast. So military could also send a good signal to public that it supports an economically stronger Pakistan. The procurement budget may be maintained since it is crucial for maintaining combat capabilities but some effort could be made to curtail the current expenditures by introducing austerity.

I agree in essence but some folks are saying that in real terms the militry budget has decreased. Then you also have to keep in mind the specifics. Majority of the money allocated is being used for the upkeep of existing equipment and human resource. The WoT has put a great strain on the equipment and engineering departments, and from what I've seen, alot of austerity is done.
This war is affecting us in every possible way.

4- Another controversial view. HEC's funding could be rationalized. I know its controversial but at the moment we need an expanding industry. Because if we don't have industrial capacity amid economic growth, no matter how much educated human resource we produce, we will only end up with more unemployment (Case in point: Srilanka). So well one may disagree with my view but at initial stage, we should spend as much possible on ensuring higher economic growth.

Well that was my short view on the budget. Feel free to disagree and correct me where necessary

Completely agree with this. Also when PML announced those youth schemes, then there was no need IMO to give this much of a jump start to HEC. More emphasis on primary education would have been better, and also industry as you said.

All in all, a fairly balanced budget considering the economic room to maneuver in. But the major loophole is still the let off for the rich. Instead of raising the GST by one percent and stuff like that, they could have been more strict on the rich. In other countries, as you get richer, you pay more tax. In Pakistan it is the opposite.

Real Estate and agriculture sector should have been reined in more. As Asad Umar said on ARY, these people don't do tax theft, since they aren't liable to pay tax in the first place!

 

[SBD-3]

But yesterday, Dr Farrukh Saleem said that who will be willing to buy our bonds?

Banks of course. You know what, there is a big credit anomaly that prevails in Pakistan. Banks (which carry a credit risk) pay their depositors (lenders) around 6-7% whereas the Government (which is technically a credit risk free entity) pays around 9% to its debt holders (lenders). So government debt market is always lucrative for both 1)Banks (since they can earn a risk free spread of the difference between government debt rate and deposit rate) and 2) Of course the retail investors who can cash in on lucrative government debt. Ever since the government security market has been opened for investors and retail/small investors, there has been a significant pick up in the demand for government securities.

 

[Jango]

Banks of course. You know what, there is a big credit anomaly that prevails in Pakistan. Banks (which carry a credit risk) pay their depositors (lenders) around 6-7% whereas the Government (which is technically a credit risk free entity) pays around 9% to its debt holders (lenders). So government debt market is always lucrative for both 1)Banks (since they can earn a risk free spread of the difference between government debt rate and deposit rate) and 2) Of course the retail investors who can cash in on lucrative government debt. Ever since the government security market has been opened for investors and retail/small investors, there has been a significant pick up in the demand for government securities.

Even foreign banks and all? Since I clearly remember that he mentioned foreign. Which foreign bank/entity will be willing to buy our bonds?

I should have been more clearer earlier.

 

[SBD-3]

Isn't the subsidy being made targeted? Atleast the electricity subsidy?

I couldn't get the break up of this figure.

Real Estate and agriculture sector should have been reined in more. As Asad Umar said on ARY, these people don't do tax theft, since they aren't liable to pay tax in the first place!

Real estate tax has been imposed on both renting as well as selling of real estates. Agriculture income tax has become a provincial subject. Some of the taxes (like Agriculture,GST on services etc) were handed over to provincial government so that they could gain more financial autonomy in raising taxes domestically rather than keep depending upon centre. For example, in Punjab the agriculture tax is collected under Punjab Agricultural Tax Act 1997. The centre is entitle to collect agricultural income if and only if the provincial agricultural tax has not been paid by the tax payer.

Even foreign banks and all? Since I clearly remember that he mentioned foreign. Which foreign bank/entity will be willing to buy our bonds?

I should have been more clearer earlier.

I dont know and I dont see any need for raising debt from foreign banks. Why would we need to raise a debt in dollar when our liabilities are going to be in PKR? It would expose Government to additional exchange rate risk. Salman shahbaz clearly indicated in his interview that government will raise debt through T-Bills (which are denominated in PKR)

 

[Jango]

Real estate tax has been imposed on both renting as well as selling of real estates. Agriculture income tax has become a provincial subject. Some of the taxes (like Agriculture,GST on services etc) were handed over to provincial government so that they could gain more financial autonomy in raising taxes domestically rather than keep depending upon centre. For example, in Punjab the agriculture tax is collected under Punjab Agricultural Tax Act 1997. The centre is entitle to collect agricultural income if and only if the provincial agricultural tax has not been paid by the tax payer.

I don't know much about economics so bear with me!

Jehangir Tareen made a point on TV that if you have less than 50 acre of land, you are not liable for tax.

In the real estate sector, Ahsan Iqbal said that they are giving some leeway and promoting it so that a construction boom takes place, cement, iron, steel etc get a boost. They are also providing 50 lac loans or something like that, Arif Avi raised the point that a poor guy isn't going to get a loan of 50 lac, it would be the rich. So again, this budget caters to the rich rather than the poor, in forms of tax and other incentives.