September 13, 2018: The National Power Regulatory Authority (NEPRA) has proposed an increase in power tariff by Rs. 4 per unit, in a summary forwarded to the power division on Wednesday.
Nonetheless, the Ministry of Water, Power and Energy will be the final decision maker with regard to increase in power tariffs. The summary also includes arrears worth Rs. 18 billion to be collected from customers.
Meanwhile, the PTI government has decided to impose new taxes of about Rs. 400 billion in the amended mini-budget to be presented in the National Assembly on Tuesday 18th September. It has decided to bring down the taxable ceiling from Rs. 1200000 to Rs. 800000 whereas the import duty on 150 luxury items would be increased.
The government further plans to cut expenditures and review all macroeconomic targets for the fiscal year 2018-19 in the mini-budget. The approval of the amended Finance Act 2018 is crucial for the government's upcoming engagements with the International Monetary Fund (IMF), that’d send a team to Islamabad on September 27 for a week of discussions on Pakistan's balance of payments crisis.
Finance Minister Asad Umar and other top officials are expected to estimate the likely conditions of a potential bailout from its meetings with IMF.
Asad Umar initially initiated remedial measures for Pakistan's record twin current account and budgetary deficits in the wake of tough times, to empower Pakistan's position at the exploratory talks with the Fund representatives before his departure to Bali, Indonesia for final negotiations at the annual meeting of the IMF and the World Bank on October 8-14.
To reduce the budgetary deficit, the government has already decided to table 200-300 unapproved schemes. This would cut the development expenditure to Rs. 600-650 billion in 2018-19, from the current allocation of Rs. 1030 billion.
These cuts would facilitate the revision of the projected budgetary deficit to hover around 5.3-5.5 percent of gross domestic product (GDP), from the unrealistic target of 4.9 percent set by the former PML-N government.
Under the proposed amendments to the 2018-19 budget, the government plans to withdraw some of the tax exemptions extended to the high-income class by the previous government.
The proposals further aim to reduce by half the taxable income ceiling to Rs. 800000 a year, and an increase the maximum rate of income tax to 20-25 percent from the existing 15 percent. To curtail the current account deficit, the government plans to increase customs and regulatory duties on some 6,000 type of imported goods.
The proposed changes would ease the setting of a new revenue collection target. The Federal Board of Revenue collected Rs. 3842 billion in the financial year ending June 30. The existing target for 2018-19 is Rs. 4435 billion.
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