ISLAMABAD: The government plans to borrow an extra Rs700 billion to meet the budget deficit next financial year, a 25.3 percent jump which is twice as much as targeted in the previous financial years from 2001-11, officials making the new budget in Islamabad revealed to our sources here Sunday.
They said debt repayment, defence spending and high mark-up on loans previously acquired are the main areas of concern that necessitate such a huge leap. The total outlay of budget 2011-12 was Rs2.8 trillion, and the outlay in the next financial year (2012-13) would be somewhere Rs3.5 trillion. The last year’s outlay size was higher by 14.2 percent than the size of budget estimates in 2010-11.
The resource availability during 2011-12 has been estimated at Rs2.5 trillion (against Rs2.3 trillion in the budget estimates of 2010-11). Next year it is being projected at Rs2.8 trillion, while the rest of the gap is to be filled by deficit financing, mainly borrowing, to further increase the debt which is becoming unbearable for the government, the sources added.
In this crisis situation, they further said, the main consumers and income-earners to be burdened with the federal spending shoot up would be those paying income tax, sales tax, surcharges on energy items, while a new tax is being introduced ‘amenity tax’.
This tax would be payable by the dwellers of posh areas and planned towns of the country the list of which is being computed at the development authorities of the country. Net revenue receipts for 2011-12 had been estimated at Rs1529 billion, indicating an increase of 11 percent over the budget estimates of 2010-11, and the next year’s net revenue receipts are being estimated at Rs2.05 trillion.
The overall expenditure during 2011-12 had been estimated at Rs2.8 trillion, of which the current expenditure was to be Rs2.3 trillion. The next year’s overall expenditure would be Rs0.7 trillion higher.
The current expenditure was planned to increase by less than one percent over the revised estimates of 2010-11, while development expenditure was (as planned before the passage of 18th Amendment) to increase by 64.4 percent in 2011-12, over the revised estimates of 2010-11. Now this increase has diminished as the finances are to be transferred to the provinces, as per the mandate of 18th Amendment.
The share of current expenditure in total budgetary outlay for 2011-12 was to be 84 percent as compared to 90 percent in revised estimates for 2010-11. This share would be nominally reduced in the next budget, as sources revealed.
The tax revenue was to be collected at Rs2 trillion this year, and for the next year it is being planned at Rs2.5 trillion. Some of the major adjustments on the relief side have been planned as follows (more being given final shape before May 1, 2012):
Basic exemption limit for salaried and individual taxpayers might be enhanced from Rs350,000 to Rs400,000. The limit for filing wealth statement with reconciliation increased from Rs1 million to Rs2 million, given the high rate of inflation and the depletion of rupee vis-‡-vis major foreign currencies, particularly the US dollar; in future member of AOP shall furnish wealth statement with reconciliation if his share (before tax) for the year is Rs2 million or more, and not Rs1 million or more, as previously. The right of appeal against provisional assessment order u/s 122(C) is being given; a single bench of tribunal shall dispose off all cases involving tax and penalty not exceeding Rs1.5 million, and not Rs1 million, as previously.
The rate of withholding tax on cash withdrawals from banks is to be reduced further to 1.5 percent (it was reduced from 0.3% to 0.2% in the federal budget 2011-12). Commercial and industrial consumers of electricity to necessarily file return of income shall in future be those with annual billing above Rs1.5 million and not one million, as previously. (Online)