Budget Philosophy

Reforms-led Growth
Job Creation

Massive Tax relief

Investment promotion
Pro Poor

Fairness in Taxes
Reducing Burden on poor
Widening tax net

Budget Philosophy
Incentives for Industry and Agriculture
Reduction in Input Cost
Investing in Research / Technology
Protection against dumping

Drastic Reforms in FBR

Full autonomy

Govt expenditure Reform

High powered Commission to review all public
sector expenditure

Main Measures
Tax Relief:
Sales Tax rate reduced to 12.5%
Withdrawal of GIDC
Corporate Tax rate reduced by 5%
each year
To fall to 20% in 3 years
Lowest in the region

Main Measures
Tax Relief:
Sales Tax rate

12.5%

Corporate Tax
GIDC

20%*

0%

Total relief
* (Over 3 Years)

Rs 849 bn

Main Measures
Immediate Impact:
Diesel price to fall by Rs 18 / litre
Petrol price to fall by Rs 6 / litre
Sales tax relief of Rs 55 billion for
consumers
Rs 145 billion relief on GIDC
Fertilizer prices to decline

Main Measures
Impact:
Transportation cost to come down
Positive effect on price of food items
Positive effect on general commerce
Inflation to come down
New investment + jobs

Main Measures
Tax measures:
Use of NADRA list of 3.2 million
Widen the tax net

Reduction in exemptions
Property capital gains tax
Adjustable Minimum asset tax

Main Measures
Tax measures:
Windfall profits tax
Reducing scope of Presumptive Tax
Regime
Increasing Capital Gains Tax on
equities

Main Measures
Tax measures
Rs bn
Reduction in exemptions
100
Use of NADRA database
Improved enforcement +
compliance

72

Capital gains tax on property trnx

15

Windfall profits tax

13

Introduction of minimum asset tax

10

40

Main Measures
Improving enforcement + compliance:
Income tax
Potential available= Rs 100 Bn

Sales tax
Potential leakage =Rs 140 Bn

Withholding tax regime

50 Bn

Main Measures
Savings through efficiency:
Reducing leakages in PSDP
3:1 ratio of project cost between public & private
sector

Prioritization of PSDP
People and growth focused

Introduction of Public-Private Partnership Model

(PPPM)
Bringing in private sector investment for public good

Main Measures
Savings through efficiency: (Contd.)

Improved efficiency in power sector

Reducing losses
Strictly follow economic order of dispatch

Reducing leakages in FBR

Cleaning up refund payment system
Reduce mis-declaration / under-invoicing

Restructuring of Public Sector Enterprises (PSEs)

Main Measures
Savings through efficiency:(Contd.)
Review of all large Govt procurement contracts
LNG Contract
Govt purchase of commodities
Metro Bus Project

Savings in current expenditure

Improved Govt cash + debt management
Large scale issue of PIBs at the wrong time

Expenditure
Main expenditure items:
Defence

NAP

Rs. 30 bn

Fully Funded

PSDP

Rs 750bn

+43%

FATA

Rs 50 bn

Salaries

Rs 820 bn

Rs 193 bn

+17%

Special Package

+10%

Expenditure
High-priority spending
1. FBR
Operational budget increase for autonomous FBR
Organizational development program
Investment in world class IT

Provide cutting edge enforcement & compliance

Will dramatically reduce officials discretion

Staff training + HR development

Expenditure
High-priority spending (Contd..)
2. Civil service reform
Staff training + HR development
Reorganization

3. Education and Health (Federal)

Upgrading of school/college facilities
Upgrading quality of teaching
Upgrading hospitals & make them autonomous

Expenditure
High-priority spending - (Contd.)
4. Investment
Technology Up-gradation Fund
Incentives for new investment by SMEs
Zero duty on plant and machinery

5. Export promotion
Strategic Trade Policy initiatives

Expenditure
High-priority spending (Contd.)
6. Energy
Focus on fast track hydel
Invest in energy delivery infrastructure

Crash program of upgrading rural / urban

transformer capacity.

Expenditure
High-priority spending

(Contd.)

7. Water
Bhasha to be completed on war footing
with full funding
Neelum Jhelum financing issues to be
removed
Initiatives to address drinking water crisis

Expenditure
High-priority spending

(Contd.)

8. Agriculture
Protection against dumping of subsidized produce
Reduction in input costs for farmers due to decrease in
sales tax.

Research

Small farmer welfare schemes

9. Skills development

Manpower export

Improved productivity + incomes

PTI Shadow Budget

Thank you

Summary of Reform Scenario

Allreformscenarios

%of"potential"captured

Moderate

2015-16

2016-17

2017-18

40%

50%

60%

(A) Increaseinresources

204

510

991

1. Revenuemeasures

84

225

408

2. Improvingenforcement+compliance

40

132

381

3. Savingsthroughefficiency

80

153

202

285

366

415

4. Loweringoftaxrates

240

291

344

5. Investmentincentives(SMEs)

15

25

25

6. Capital+high-priorityspending

31

50

46

-82

144

576

(B) Useofresources

(C) Netresourceavailability(A-B)