ISLAMABAD: Contrary to expectations, the federal budget for the financial year 2022-23 is realistic and the targets have been set keeping in view the objective realities.
Major targets such as 5% GDP growth, exports of 35 35 billion, remittances of 33 33.2 billion and revenue of 70 70 trillion are achievable. However, achieving some goals can be challenging. These include keeping inflation at 11.5 per cent and trade deficit at 2.2 percent of GDP, raising Rs 3 trillion from petroleum levy and Rs 96.41 billion through privatization.
The most anticipated was which sector would be affected by the new taxes and how much. However, the new taxes are only Rs 440 billion and two-thirds of them will be direct taxes, mainly on the rich. Tax exemptions on imports of solar panels, supply to hospitals, export processing zones, etc. have been abolished in the next financial year. The abolition of sales tax on seeds, tractors and other agricultural implements and implements will benefit the agricultural sector.
In terms of customs duty, 400 tariff headings have been rationalized, the regulatory regime has been reformed and customs duty on pharmaceutical raw materials has been abolished. Income tax relief has also been provided where necessary.
Tax on banking sector has been increased from 39% to 42%. Numerous measures have also been taken to protect taxpayers from harassment. The allocation for New Pakistan Housing Authority has been reduced from Rs 30 billion to Rs 50 crore.
The entertainment industry has been given tax exemption. We face difficulties in terms of low exports and limited foreign investment and rising costs in non-productive sectors.
In the current context, increasing the proportion of trade to GDP and attracting large amounts of foreign investment will remain a dream. Unfortunately, no specific steps have been taken in the budget to address these issues.