Budget 2013-2014: Sales tax bumped up by a percentage point

Finance Minister Ishaq Dar (R) presents the annual budget at the National Assembly as Prime Minister Nawaz Sharif (L) reads a copy of the budget in Islamabad on June 12, 2013. PHOTO: AFP

ISLAMABAD: Federal Finance Minister Ishaq Dar presented the federal budget for the year 2013-2014 in the National Assembly on Wednesday, Express News reported.

The first litmus test of the newly sworn-in government began when Dar presented a Rs3.5 trillion federal budget in a bid to revive the country’s ailing economy. Designed to target an estimated growth rate of 4.4% over the next fiscal year, the budget would seek to reduce non-development expenditures and fix a burgeoning energy crisis that has been costing the country 2% of gross domestic product annually.

Finance minister Ishaq Dar told the national assembly that the government would clear $5 billion in circular debt from the energy sector within the next 60 days.

“This will greatly help minimise power cuts in the country,” Dar said, giving no details on how the government would find the money to pay the bills.

Years of mismanagement, under-investment and corruption cause blackouts of up to 20 hours a day in blistering summer heat, when temperatures reach up to 50 degrees Celsius (122 Fahrenheit).

Pakistan is still paying off a $11.3 billion International Monetary Fund loan from 2008.

A 10% increase in defence spending was also announced, despite the country facing a crippling budget deficit of 8.8 percent.

The new budget earmarked Rs627 billion ($6.3 billion) for defence, a 10 per cent increase compared to Rs570 billion in the outgoing year, ending June 30.

Business was also a key focus for the new government and announced a three year gradual reduction in the corporate tax rate which will be reduced by 1% over the next year and by 4% more in the subsequent years.

Source: The Express Tribune/AFP