Critical economic decisions before polls
Just a few months before the Presidential elections, the Finance Ministry is taking on critical issues affecting the country’s economy while providing concessions for the people.
The government is to deviate from norms to make key announcements shortly relating to relief for farmers, small and medium businesses especially to Easter terror affected sectors and the middle class.
A Vote on Account (VOA) has already been approved by the Cabinet to meet state expenditure for the first quarter of next year as it is not prudent to present the full budget 2020 on the eve of presidential and other polls.
According to provisional estimates of the Ministry, state expenditure has been set at around Rs. 1887 billion for the first quarter of next year with a majority of being allocated for debt servicing. VOA is the permission required to withdraw money from the Consolidated Fund but it has no provision to spend money from new revenue proposals.
However the government will take measures to ensure that an adequate space is provided for social and capital spending to provide goodies and relief for the people targeting elections within the overall spending envelop, a senior Ministry official said.
Under this set up Nation Building Tax (NBT) and Value Added Tax (VAT) have been amended recently providing tax exemptions for tourist and building construction sectors.
For hotels, guesthouses and restaurants which are registered with the Tourist Board and where they receive payment for such service in foreign currency through local commercial banks, such money will be exempted from NBT.
This is aimed to strengthen the tourist industry. At the same time, import of yachts and other vessels for pleasure or sport purposes will also be exempted from NBT.
The exemption of NBT presently available for sub contractors in the construction industry sector will be made available to the main contractors too.
In addition, this tax concession will be given to the importers of unprocessed gems on the recommendation of the National Gem and Jewellery Authority.
The palm oil manufactured locally out of imported crude palm oil will also come under this exemption of NBT.
VAT will not be charged from housing projects which sell housing units that are sold not exceeding Rs.25 million each.
If a housing unit is provided by a Condominium which had obtained a compliance certificate from the relevant Local Government Authority or under an agreement of sale under the Notary Ordinance before the VAT Amendment Act was ratified, VAT will not be charged for such property as well.
In addition, the locally produced rice bran oil manufactured out of locally produced red rice will also be exempted from VAT.
All these amendments, once drafted by the Legal Draftsman will be presented in Parliament for approval in September.