New budgetary measures to pull out from tax breaks

September 12, 2018 (MLN): New budgetary measures proposed by Minister for Finance Asad Umar, are likely to reduce, or even end tax exemptions and reliefs given to salaried individuals during the tenure of the former Minister for Finance Miftah Ismail, thereby leading to a much needed increment in the tax revenues of the government, according to sources in the Ministry of Finance.

A parliamentary session is scheduled to be held on September 14, 2018 with new budgetary measures for the country likely to be in the spotlight, as the newly elected government is already in the process of reviewing those measures and has sent the relevant suggestions to the Federal Board of Revenue.

Tax revenues via the new measures that would include reducing the loopholes in the tax system as well as reducing the tax breaks with respect to income taxes are likely to increase tax revenue by Rs 300 billion, sources added, further elaborating that amendments related to the reduction of tax breaks alone are likely to increase income tax collection by Rs 100 billion for the government.

In addition to this, Finance bill for the year 2018 will be presented for amendment during the session as part of the government’s drive to increase tax revenues and narrow down the fiscal deficits of the country.

Terming the prior government’s budget as “unrealistic,” Minister for Finance had announced that his government was in the process of reviewing new budgetary measures in order to make the budget more relevant to the state of the economy as well as the vision of the new government. Reference to the state of the economy refers to realities on ground in light of the twin deficits the country has faced in the outgoing financial year and the resulting rundown on foreign reserves of the country. 

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