Everyone will have to pay tax: the Minister of Finance

Announces tax breaks for the education and health sectors. It says tax exemptions cannot be granted for packaged milk. Finance bill fails to address critical economic challenges, says opposition leader. Government will increase tax to GDP ratio to 13%: Aurangzeb.

ISLAMABAD – The National Assembly on Friday passed the Finance Bill 2024 after a clause-by-clause consideration with specific amendments.

Minister of Finance and Revenue Muhammad Aurangzeb has introduced a motion to consider the Finance Bill 2024 to give effect to the federal government’s financial proposals for the year commencing July 1, 2024.

The motion was passed with a majority vote, leading to the adoption of the Finance Bill 2024 after clause-by-clause reading and adoption of amendments after due process of voting. All amendments submitted by opposition MPs were rejected.

The total federal budget outlay for fiscal year 2024-25 is Rs 18.877 trillion. This budget outlines the government’s fiscal policies and budget allocations for the coming financial year, reflecting a comprehensive plan to address various economic and social challenges.

The government allocated PLN 500,000. In the current budget, Rs 1,400 billion will be allocated for Public Sector Development Program (PSDP) and an additional amount of Rs 100 billion will be allocated under public-private partnership, taking the total amount to Rs 1,500, the highest in the country’s history.

Under budget grants of Rs 1,777 billion for the promotion of Benazir Income Support Program (BISP), Azad Jammu and Kashmir (AJK), Gilgit-Baltistan, KP merged districts, Higher Education Commission, Railways and IT sectors have been allocated.

To ensure equitable development in Azad Chestnut, GB and the merged districts of KP, the government has allocated 10% and about 11% for the development of other sectors including IT, telecommunications, science and technology, management and manufacturing sector.

The House also held a discussion on accrued expenditure, which included applications for grants and appropriations for the fiscal year ending June 30, 2025. The House approved 133 applications for grants related to various departments and ministries. In accordance with Article 187 of the Rules of Procedure of the National Assembly for 2007, not less than four days shall be set aside for the general discussion of the budget. However, the National Assembly efficiently continued the debate on the Budget Act for 2024 for eight days.

Formal debate began on June 20, 2024, and continued through June 27, 2024. The House also discussed the Senate’s recommendations.

Finance Minister Muhamamd Aurangzaib called the 2024-25 budget a growth budget and said it was based on a well-thought-out strategy to boost economic growth.

He said the budget for the next financial year aims to reduce the budget deficit by increasing government revenues and reducing unnecessary spending.

Muhammad Aurangzaib reiterated the government’s commitment to increase the tax-to-GDP ratio to 13 percent, which is currently only 9.5 percent. He said the country had achieved macroeconomic stability. He stressed that economic indicators, including the current account, fiscal deficit, inflation and foreign exchange reserves, were stable and under control.

He outlined the government’s plan for continued economic stability in the next fiscal year, with the aim of taking the country towards sustainable economic growth. He also called for revamping and digitalisation of the Federal Board of Revenue (FBR) to ensure high GDP targets. He said the concept of non-filers would be eliminated from the tax system, making everyone liable to pay taxes.

The minister expressed the government’s determination to curb tax evasion and widen the tax net, especially in the retail and real estate sectors. He said the current account deficit has narrowed, the fiscal deficit is under control and the country has foreign exchange reserves of $9 billion, which covers imports for two months.

He highlighted the significant reduction in inflation from 38 to 11 percent and the continued food inflation of two percent. He said no tax was imposed on solar energy.

The Finance Minister said that cardiac stents, surgical items, books, printed matter and articles in FATA and PATA region have been given tax exemptions. He said that tax exemptions cannot be granted for packaged milk which does not meet quality standards. He said that these tax exemptions for education and health sector have been granted despite difficult economic conditions.

Opposition leader in the National Assembly Omar Ayub, as well as Pakistan Tehreek-e-Insaf (PTI) chairman Gohar Ali Khan and Sunni Ittehad Council leader Ali Muhammad, said that relevant stakeholders were not taken into consideration while formulating the bill.

Omar Ayub said: “The Finance Bill fails to address the critical economic challenges facing the country and has been drafted without proper consultations with key stakeholders.” Gohar Ali Khan said: “This bill does not reflect the aspirations of the people or the economic realities of the country.”

Aurangzaib also said that the government has committed to increasing the tax-to-gross domestic product (GDP) ratio to 13 percent, while it is currently very low at 9.5 percent.

The minister said the country has achieved macroeconomic stability and by maintaining economic stability in fiscal year 2024-25, “we will lead the country towards sustainable economic growth.”

Meanwhile, while participating in the discussion on the 2024-25 budget in the National Assembly, he said that the country is currently experiencing economic stability and all economic indicators, including the current account, budget deficit, inflation and foreign exchange reserve, are stable and under control.

The minister said the government is committed to revamping and digitizing the Federal Board of Revenue (FBR) to increase tax to GDP to 13 percent. He said that in the tax system there will be no category of people who do not file tax returns and everyone will have to pay tax.

Aurangzaib said that tax evasion would be stopped and tax net for retail and real estate sector in the country would be increased. He said that the current account deficit has narrowed, the financial deficit is also under control and the country currently has a foreign exchange reserve of $9 billion, which has provided cover for imports for 2 months.

He said inflation has fallen from 38 percent to 11 percent, while food inflation is now at two percent. He said reforms of state-owned enterprises and the energy sector will begin in the next three years and the privatization process will be completed.