Delay in amended finance bill”s passage indicates government strategy

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Delay in the passage of the second amendment finance bill 2019 implies that the budget deficit would not suffer a hit due to the incentive package for industrialists, at an estimated cost of Rs 6.8 billion by the government and over Rs 140 billion by independent economists.

Official sources on condition of anonymity told Business Recorder that the government”s decision to prorogue the assembly on 25 January, two days after the finance bill was presented in the assembly may have been due to concerns of the bill”s impact on the budget deficit. The next session of the budget has been called on 18 February by the President.

Senior Pakistan Muslim League (PML-N) leader Muhammad Zubair while talking to Business Recorder stated that past precedence is that a budget is passed and made effective within 20 days of its presentation in the National Assembly.

Also Read: Senate panel rejects three key proposals of finance bill

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“It is a deliberate delay, as delay in the implementation of relief measures would benefit the government in terms of revenue”, Zubair added, In response to a Business Recorder query, a senior official of the National Assembly Secretariat stated that the constitution does not bind the government with regard to the time-frame for approval of budget from the National Assembly.

“However the National Assembly Secretariat has received the Senate recommendations within the stipulated time of 14 days,” the official said.

The relief measures, to be applicable from the next day of assent given to the Bill 2019 by the President, include: (i) abolition of withholding tax on banking transactions of filers (with revenue impact of Rs 2-3 billion). In 2017-18 FBR collected Rs 45 billion from banking transactions including cash withdrawals from banks of filers as

well as non-filers; (ii) exemption/reduction in customs/regulatory duty on the import of industrial inputs/ smuggling-prone items with an estimated revenue impact of Rs 6-7billion; (iii) increase in the rate of Excise Duty from 20% to 25%, for cars and jeeps up to capacity 3000 cc and to 30% for cars exceeding 3000 cc and levy of 10 percent Excise Duty on locally manufactured/assembled cars above 1800cc expected to generate Rs 2 billion. Sales tax exemption on plant and machinery to Greenfield industries would be applicable from July 1, 2019.

(This news/article originally appeared in Business Recorder on February 11th, 2019)

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