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Dar rejects Senate committee proposal to reduce GST

18 June, 2013

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ISLAMABAD: Finance Minister Mohammad Ishaq Dar has said that the Senate committee on finance should come up with an alternative plan to generate an additional Rs60 billion if it does not support the increase in GST from 16 to 17 percent. "This is not the time to play havoc with the economy particularly when public debt has ballooned to a whopping Rs14 trillion in 2013 from Rs3 trillion of 1999", he said.

Mr Dar said the time has come for the standing committee to decide either to stabilise the economy or to do politics. He further said that government has carried out an exercise in the budget to minimise the expenditures, as there is almost no increase in the current expenditure while the ministries' expenditure has been slashed by 30 percent. On the demand of Senator Haji Adeel to cut the defence budget by Rs50 billion, Dar said that the government has already given less than the demanded amount, as it has allocated Rs627 billion against a demand of Rs700 billion.

The finance minister informed the committee that the government has prepared a roadmap wherein the budget deficit would be reduced to 4 percent in the medium term framework. It will be curtailed by 2.5 percent in the next financial year 2013-2014 to 6.3 percent of the GDP and would be brought to 4 percent of the GDP by June 2016.

He added that the government has increased the GST before approval of the budget under the provincial collection of taxes act 1931. "All political parties need to sit together to annul this act after the budget if someone has concerns about it", he told the committee. Talking about the revenue collection, Dar said that the government has projected Rs2.475 trillion revenue target for 2013-2014 that would be 23 percent higher than the estimated collection of Rs2.007 trillion of the outgoing fiscal year 2012-2013.

The government has to generate an additional Rs475 billion in the next year wherein Rs200 billon would come through new taxation measures and the remaining would come from controlling leakages in the tax department.

The minister said the federal government could not collect the agricultural income tax, as it is the responsibility of the provinces according to the Constitution. The provinces could improve the collection, which stood at only Rs1 billion, he added. "The government will clear the dues of power generation companies that would help in generating additional 1500 to 1700 megawatt of electricity", Dar declared. We have inherited circular debt of Rs500 billion, which is a big challenge for the new government.

Senator Dar said that the government has allocated Rs75 billion for Income Support Programme that included Benazir Income Support Programme and six other programmes. Similarly, he said, it has increased the Public Sector Development Programme to Rs540 billion from Rs360 billion.


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