PTI leader Asad Umar, during his speech in the National Assembly on Thursday, asked his party’s government to reconsider the increased tax on sugar and cooking oil in the federal budget.
Acknowledging that the federal budget ─ set to unroll with the arrival of the new fiscal year on July 1 ─ was a “budget for tough times”, Umar congratulated the team that had prepared it.
“The economy is currently facing multiple problems,” said Umar, who is the chairman of the National Assembly’s Standing Committee on Finance, as he began his speech on the budget.
He said that at the time the PTI government was formed, one “deferred ailment” that the government was dealing with was foreign debt.
Umar said that the current account deficit of $2.035 billion a month was reduced by 70 per cent in the last three months before his resignation.
The former finance minister noted that the turnover tax has been increased in the budget presented on June 11. “At least the new investments should be excluded from this minimum tax in the first five years,” he recommended, adding that balancing, modernisation, rehabilitation and expansion (BMRE) tax credit should be restored.
Umar then said that it was not suitable to increase taxes on sugar for which prices were already rising.
“It [raise in tax] should be taken back and [they] should also investigate why sugar prices are rising so quickly.”
He had the same opinion on increasing the taxes on edible oil and gheeand asked Adviser to the Prime Minister on Finance Dr Hafeez Shaikh to reconsider when winding up the budget.
“The total receivables after an increase in the taxes on sugar, oil and ghee are minimal.”
“Similarly, the federal excise duty (FED) on small cars, we had already increased the duty on expensive cars and now the duty has been increased on import of small cars like Alto. As I have said, the middle-income class is also going through a difficult phase. I think this measure should also be reviewed.”
Umar recommended that Employees’ Old-Age Benefits Institution (EOBI) pensions should also be enhanced from ten to fifteen per cent.
The former finance minister said that there were five main factors — electricity prices, gas prices, tax rates, policy rates of State Bank of Pakistan (SBP) and rupee valuation — which were discussed during negotiations with the International Monetary Fund (IMF) for an agreement.
He said that with regards to the exchange rate, he was “very happy” that the SBP governor said that there shouldn’t be “free float in a country like Pakistan”.
On the basis of the increase in electricity prices in the previous year, IMF wanted an additional electricity price increase, taking it to an overall 50 per cent increase, Umar told the house. However, the National Electric Power Regulatory Authority (Nepra) valuation was an 11pc increase, which following adjustments may go up to approximately 15pc.
According to the former finance minister, the IMF wanted the debt accumulated before and during the PML-N’s government to be recovered.