Published Date: May 15, 2014
Advisory committee weighs proposals for next budget
The government has decided to increase the tax net, not the tax rates
and would strongly go against tax theft and evasion as part of the next
year’s federal budget strategy.
This was the message the Ministry
of Finance conveyed to the Economic Advisory Committee (EAC) which met here on Wednesday as part of preparations for next year’s federal budget. Finance Minister Ishaq Dar presided over the meeting and informed the private sector members that their valuable recommendations would be considered as much as possible while finalising the next year budget.
The committee discussed proposals from five different sub-groups. The minister also informed the committee about recently completed third successful review by the International Monetary Fund (IMF) and on the latest economic indicators.
He said the economy was now taking off. “We are now in a comfort zone as far as our foreign exchange reserves are concerned”. He added that with the over subscription of Eurobond, successful auction of 3G/4G spectrum and improved economic indicators, the international confidence in Pakistan had increased to a level where a stronger economic base could be built.
industry and trade sub-group led by former minister Abdul Razak Dawood proposed diversification of the export base by promoting value-added exports like engineering, IT, chemicals and food processing. It recommended deregulation of the economy by creating a level playing field to allow new entrants in the local manufacturing field as compared
to the imported finished products.
The sub group also discussed a
proposal for simplifying the tariff structure and moving away from the import substitution to export led growth along with maintaining the transparency, consistency and simplicity of tariff structure.
The sub-group on resource mobilisation and expenditure management led by Dr Miftah Ismail proposed that the tariff rationalisation process should be
expedited to provide a level playing field to businesses. The sub-group
further proposed that an automation process at the FBR may be improved by developing an integrated IT system to improve service delivery and enhance transparency.
On the expenditure management side, the sub-group also suggested formation of a task force to analyse overall expenditure management at the federal level including throw forward in the capital budget and make suggestions for the improvement in social sector in the budget.
The energy sector sub-group led by Farooq Rahmatullah proposed the possibility of drilling over 100 wells in the next financial year for the development of oil and gas sector. Some members thought it was too ambitious a target given Pakistan’s overall investment and security environment.
They recalled that such unrealistic targets are being considered since military takeover more than a decade ago but never realised. The government informed that it had already increased gas price for fresh exploration from less than $4 per mmBtu (million British thermal units) to about $6-8 per mmBtu under the new petroleum policy.
Another proposal pertained to improvement in recovery mechanism by Ministry of Water and Power to collect the amount due to both public and private sector. The group also
suggested revision of sectoral priority in order to give preference to power sector and industry.
Dr Abid Qaiyum Suleri, who led the food
security and agriculture sub-group, proposed revision in the food security agendas and policies according to the new definition of poverty
line of $2 a day. The sub-group recommended formation of a National Food Security Council with representation of provincial governments and other relevant stakeholders, co-chaired by federal ministers for finance
and food security and research and introduction of special nutrition programmes for children under 5 years.
The social sector sub-group
led by Dr Sania Nishtar proposed establishment of Geographic Information System (GIS) based Social Sector Information Observatory, resolution of the post 18th amendment outstanding issues and developing instruments to cater to demand side of social protection needs.