ISLAMABAD - Amid heavy sloganeering from opposition, PTI-led government on Tuesday presented its first annual budget with a record outlay of Rs7,036 billion for the upcoming fiscal year, which is 30 percent higher than the budget of the outgoing year.

The proposed budget carries the highest-ever deficit of Rs3,150 billion (7.2 percent of the GDP) despite introducing massive additional revenue generation measures (of worth Rs512 billion) and reduction in expenditure.

The members of joint opposition entered the house wearing black ribbons around their arms 10 minutes after the start of the budget speech by Minister of State for Revenue Hamad Azhar. They staged a strong protest and kept shouting anti-government slogans during his speech.

Expenditure and Revenue

In current expenditures, the government has allocated Rs2,890 billion for interest payment, Rs421b for pension, Rs1,150b for defence, Rs271.5b for paying subsidies, Rs431.2b on running civil government, Rs831.2b for grants and transfers and Rs79b for provision of pay and pensions. The federal Public Sector Development Programme (PSDP) would consume Rs701 billion.

In revenues, the tax collection target for Federal Board of Revenue (FBR) is Rs5,555 billion while non-tax collection target is Rs894.5b. The privatization proceeds would generate Rs150b. The provincial surplus is estimated at Rs423b. The federal government would transfer Rs3,255 billion to the four provinces under National Finance Commission (NFC) award.

Pay and pension

The government has announced 10 percent increase in salaries for government employees from grade 1 to 16, including armed forces employees. For government employees from grade 17 to 20, a 5 percent ad hoc relief has been announced.

However, there would be no increase in salaries for civilian government employees from grade 21 to 22. The federal cabinet has also decided to take a 10 percent voluntary cut in their salaries, keeping in view the economic situation of the country.

Pensions have been increased by 10 percent, while the minimum wage has been set at Rs17,500 per month.

Austerity plan

Minister of State for Revenue said that federal government and armed forces have decided to adopt austerity plan to reduce the soaring expenditures of the country. The defence budget would therefore remain static at Rs1,152 billion for the next fiscal year. Similarly, the civil government has reduced its expenditures by 5 percent to Rs437 billion from Rs460 billion.

Pro-poor people measures

The government has allocated Rs200 billion as subsidy for protecting poor class of the society, which is using 300 unit of electricity every month. A ration card scheme is being introduced, which would facilitate one million needy people.

Similarly, 80,000 people would be benefit from the interest-free loans scheme. The government has allocated Rs110 billion for Benazir Income Support Programme (BISP) and increased the quarterly stipend given to poor people under this scheme Rs5,000 to Rs5,500.

Taxation measures

Minimum taxable income for salaried class has been reduced to Rs0.6 million per annum from Rs1.2 million per annum. There would be 11 progressive tax slabs ranging from 5 to 35 percent proposed for salaried class.

The minimum taxable income for non-salaried class would be Rs0.4 million per annum and eight progressive tax slabs ranging from 5 to 35 percent have also been proposed for this class.

The government has decided that non-filers would not be restricted from purchasing property. Non-filers would be allowed to purchase property of over Rs5 million.

Hammad Azhar announced that a Federal Excise Duty (FED) of Rs5,200 on every 10,000 cigarettes would be imposed. This would help in increasing the tax revenue from Rs114 billion in outgoing fiscal year to Rs147 billion in next fiscal.

The government has also imposed 2.5 percent FED on cars of up to 1000 CC engine capacity. Earlier, small cars were exempted from FED. The budget further proposed 5 percent FED on cars from 1001CC to 2000CC, and 7.5 percent FED on vehicles of over 2000CC capacity.

The government has recommended increasing rate of FED to 17 percent on edible oils (ghee and cooking oil), which would roughly translate to Rs40 per kg rise in the prices. The sales tax rate on sugar has also been proposed to enhance to 17 percent from existing 8 percent.

The government has also proposed increasing FED on cement, cold drinks and LNG.

The FED on LNG has been proposed to be increased from Rs17.18 per 100 cubic meters to Rs10 per MMBTU. The minister said this measure has been recommended to bring LNG price to the same level as for local gas. The existing FED rate is substantially lower and generates only Rs2 to 3 million annually, he said.

In order to realise due sales tax from CNG sector, tariff has been raised and it is proposed to re-notify the value for sales tax on supply from gas distribution companies to CNG dealers.

The government proposed that gold in jewellery may be taxed at 1.5 percent, diamond at 0.5 percent and making charges at 3 percent, with input adjustment available only in respect of gold.

Scenes at the House

The joint opposition continued its strong protest till the end of the two-hour speech of Hamad Azhar. They were holding placards in their hands inscribed with ‘Go-Niazi-Go’ and ‘IMF budget Na-manzor’ gathered around the speaker’s podium.

Some of the opposition members even blocked the vision of the state minister, while they all kept chanting slogans like ‘Go-Niazi-Go’, ‘Aleema Baji chor hai’ and ‘Jhoote (liars)’.

The government members remained around Prime Minister Imran Khan and Minister of State Hamad Azhar to protect them from hustling.

Many opposition members tore the copies of the budget speech and threw it into the air. Some pieces of papers also hit the prime minister despite the presence of the human shield around him.

The verbal brawl and sloganeering from both sides of aisle continued throughout the budget speech and many times it looked turning into fistfights anytime.

Opposition members Agha Rafi Ullah, Khwaja Asif, Murtaza Javed Abbasi, Shahid Khaqan Abbasi and others were prominent among those raising anti-government slogans.

Some women lawmakers from both sides also fully took part in this verbal brawl. PML-N’s Samina Matlob and PTI’s Ghazala Saifi were even seen pushing each other. The opposition member tried to pull the mic placed for budget speech but she was blocked by Ghazala.

Some members from government benches also showed placard inscribed with ‘Chor Machay Shor’ to the opposition members.

PM Khan kept wearing smile on his face during the budget speech and interacting with party colleagues Shah Mehmood Qureshi, Fawad Chaudhary and Murad Saeed. At the fag end of the proceedings, he twice made a sign of ‘No’ with his fingers towards the opposition.

The budget speech was lost to the cacophony of voices and media members and some lawmakers interested in hearing the speech missed the most of it.

Federal Revenues Rs6,717b

Deficit Rs3,150b

Rs701 billion for PSDP

Provinces to get Rs3,255b under NFC

5pc cut in govt running expenses

No raise in Rs1.15tr defence budget

Freeze/cut in salaries of top govt officials

10pc increase in salaries/pensions

Minimum wage Rs17,500 per month

Rs200b subsidy on electricity for poor

Min taxable income cut to Rs0.6m, Rs0.4m for salaried, non-salaried classes

Tax cut on mobile phones