Tarin unveils steps to sustain economic growth; phone calls, SMS not to be taxed
Addressing post-budget presser, finance minister lays focus on enhancing exports, savings rate: Says internet data will not be taxed: Wait for trickle-down effect ends
Shaukat Tarin addresses the post-budget news conference in Islamabad.
Addressing his post-budget news conference in Islamabad, Shaukat Tarin elaborated “We have to earn more dollars and for that matter we need to enhance our exports which are at the moment only 8 percent of our GDP.”
Accompanied by the government’s economic team including Minister for Economic Affairs Khusro Bakhtyar and Commerce Adviser Razak Dawood, Tarin said "We have presented a total growth budget and our challenge is to achieve sustainable growth.”
The minister said “We need to enhance our exports to 20 percent of the GDP in next few years.”
Tarin said the other element which can play a positive role in sustaining the economic growth is the savings rate.
Budget to target uplift of poor
Shaukat Tarin said the main focus of the inclusive growth-oriented federal budget for the fiscal year 2021-22 was to uplift the poor so that they would not have to wait for trickledown effect of economic progress.
For the past 74 years, the low-income people have been waiting for this trickledown effect, but their condition could not be improved and they remained deprived of houses, businesses, cash and health facilities, he said.
Tarin said the government was now directly targeting the poorest of the poor and facilitating them with different initiatives to upgrade their life standard without waiting for trickledown effect, which he said needed around 20 years of stable economic growth to take effect.
The minister said that this was not an easy task, however thanks to Almighty Allah for giving the incumbent government this vision to work for the poor.
He said the government through this budget would utilize ‘bottom-up-approach, for around 6 million low-income households.
Interest-free loans for poor
Under this initiative every household would be provided Rs500,000 interest-free business loan. Every farming household would be given Rs150,000 loans for every crop, Rs250,000 interest-free farming loans and Rs200,000 interest-free loans for buying tractor and machinery.
Low-interest housing loans
He said that low-interest bearing housing loans up to Rs2 million would be provided to help people buy their houses and besides that every household would be provided a Sehat Card to facilitate them in time of need.
In addition, the minister said that one person from every household would be provided free technical training to ensure employability so that the family earns respectable income.
The minister said that no doubt the government does not have space to provide these loans, which could be done through wholesale financing of commercial banks for which the government would be providing guarantees of recovery.
‘No politics with poor’
Shaukat Tarin said the identification of the poorest households would be done through a non-political survey all over Pakistan. “We will not play politics with the poor,” the minister added.
Focus on exports
He said after achieving economic stability, now comprehensive strategy was under progress to lead the country towards sustainable growth for which the country would need to enhance exports.
So, the minister added, another primary focus of the government was to promote exports and take them upto 20 percent of GDP from just current 8 percent, adding that for bringing stability in the country, there was dire need to enhance exports.
Tarin said that for the first time growth-oriented budget was presented which introduced innovation to enhance revenue collection, expansion of incentives for exporters, abolished duty on local industry abolished and also brought innovation in auto industry.
Primary focus of the government was now to promote exports and take them up to 20 percent of GDP from just current 8 percent, adding that for bringing stability in the country, there was dire need to enhance exports, he said.
The minister said that for the first time growth oriented budget was presented which introduced innovation to enhance revenue collection, expansion of incentives for exporters, abolished duty on local industry abolished and also brought innovation in auto industry.
Proposal to tax phone calls, SMS, internet data rejected
Shaukat Tarin also announced that the government has decided not to impose tax on phone calls, SMS and internet data.
The minister said that cabinet has rejected the proposal of receiving Rs1 over three-minute mobile phone calls and 10 paisas on SMS, so these would not be part of the budget.
Retailers on Tarin’s radar
Shaukat Tarin said the government has set up a tax collection target of Rs5.8 trillion for the next fiscal year which will be achieved through innovative approach including the use of latest technology.
Targeting the retail sector, he said that large retailers have sales of Rs1,500 billion, and sales tax has to be levied on all big stores. “I have figures from independent sources. Large- and middle-tier retailers have sales of Rs1.5 trillion.”
The minister said that consumers will be rewarded if they get a sales receipt. He said such schemes have been successfully implemented in Turkey and other countries.
The ex-banker said that after much deliberation it was understood that the resources to be distributed to the poor are in the banking sector. “The government does not have the fiscal space to disburse Rs 600-700 billion every year,” he said.
Tarin said duties have been abolished on almost all the raw materials, which will strengthen the local industries and reduce imports.
Talking about reducing taxes on automobile sector, the finance minister expressed confidence that the prices of cars with engine capacity of up to 850 cc will come down.
Talking about the power sector, Tarin said the government has increased subsidies to bring efficiency.
“DISCOs will be operated through independent boards and they will be privatized, while line losses will be reduced and recoveries will be enhanced.”
Tarin, on Friday, presented a Rs8.495 trillion spending-led outlay for fiscal year 2021-22 designed to achieve six to seven percent GDP growth in the next two to three years. In his budget speech, he came down hard on the economic policies of the previous governments, and stated that Prime Minister Imran Khan helped the country avert a default and put it back on the path of economic growth.