Govt may unveil Rs2.9tr budget with 4.9pc deficit

[Naveed Yaseen]

By Khalid Mustafa
ISLAMABAD: The government is to announce a Rs2.9 trillion federal budget based on “revival of economy with a human face” with a 4.9 percent fiscal deficit.

The budget will contain the imposition of 5 percent carbon duty on petroleum gases, 1-5 percent central excise duty on aeroplane and 2 percent on textile spinning machine, a senior official who is the part of the budget making confided to The News.

The government will impose the carbon duty of 7.5 to 10 percent on high-speed diesel (HSD), while 5 percent on the other petroleum products.

The 5 percent carbon duty will be levied on the products that include coal, coke coal, crude oil, motor spirit, aviation spirit, kerosene oil including jet fuel, light diesel oil, furnace oil and petroleum gases and bitumen, a senior official told The News.

The official said the government is also considering imposing 1 to 5 percent central excise duty on import of aeroplane and if one percent duty is levied, than the projected revenue stands at Rs8 million, if 2 per cent then revenue to be at Rs16 million and if 5 percent then revenue will stand at Rs40 million.

The government is also inclined to place levy by 1 to 5 percent CED on jute cutting machines with projected revenue of Rs8, Rs18 and Rs40 million respectively. Likewise the government is likely to impose duty on iron and steel by 2 percent with projected revenue of Rs9 million.

The government is also likely to impose 1 to 3 percent CED on import of cows from India with projected revenues of Rs8, Rs15 and Rs38 million. The official said that country is expected to gather revenue of Rs140 billion by the levy of carbon duty on petroleum products. And if the proposed CED on other mentioned items gets implemented the government is projected to gather revenue of Rs20 to over Rs50 billion. “The government would not impose any duty on power related projects.”

Meanwhile the Prime Minister Syed Yousaf Raza Gillani was briefed by Advisor to Prime Minister on Finance Shaukat Tarin on upcoming budget landscape.

A senior official who attended the meeting told The News that Prime Minister showed concern over the low revenue collection and said that the next year target of Rs1405 billion as revenue should be finalized in a manner that it should be realized. The official said that a 5 per cent cut in excise duty on vehicles is expected that will provide ease to the masses to purchase the vehicles and make the industry economically viable.

In the cement industry the government is also inclined to reduced the excise duty, as this step will help increase the production of the cement in the country. Next year, the government is to initiate two biggest projects that include Diamer-Basha dam and Neelum-Jhelum Hydropower project and the consumption of the cement would increase manifold. However, the duty on cigarettes would increase by 8 to 10 per cent.

When contacted Adviser to Prime Minister Shaukat Tarin conformed that the government will announce the budget with less than 5 per cent fiscal deficit -that is a 4.9 per cent deficit.

However, he claimed that the government is making the budget keeping in view the 3.4 per cent budget deficit which was earlier agreed and increase by 1.2 percent to 4.6 percent fiscal deficit has been made keeping in view the $2 billion Tokyo pledges and further increase by 0.3 per cent in fiscal deficit has been made because of the grants to be trickled down to Pakistan for internally displaced persons’ relief, rehabilitation and reconstruction. “So we are well within the 3.4 percent fiscal deficit.”

Mentioning about the carbon tax, he said that it is necessary to change the behaviour of the Pakistani masses consuming 80 per cent electricity from diesel run thermal powerhouses. “We need to develop habits to use electricity efficiently and rationally and also need to go on for coal electric power, more hydro generation with other alternative means such as wind and solar energy.”

http://www.thenews.com.pk/daily_detail.asp?id=181931