Budget 2022 introduces far reaching changes for fiscal sustainability
View(s):The Finance Ministry is nearing finalising Budget 2022 without burdening the working class and the poor in an effort to gain fiscal and debt sustainability, uplifting the living standard of the middle class.
The highlight will be the restructuring of the power, water and petroleum sectors with moves to curtail subsidies and price revisions, ministry sources divulged.
This rather difficult task is to be achieved by rationalising capital spending and increasing recurrent expenditure for essential sectors while introducing far reaching reforms in State owned Business Enterprises (SOBEs).
Fiscal instruments will be set in motion to overcome challenges of debt servicing fiscal issues, and creating an enabling environment for a more optimistic export oriented economy as the focus of the upcoming budget, ministry sources revealed.
Attention has also been focused on the introduction of new taxes or higher tax rates to enhance revenue while reducing the number of indirect taxes. The government will maintain a consistent tax policy creating environment for entrepreneurs and the business community ensuring them to provide opportunities for future planning.
The Finance Ministry’s major task at present is to devise revenue enhancement proposals in the budget introducing a comprehensive strategy that interlinks tax policy reforms and revenue administration reforms, ministry sources said.
This includes the combining of several tax instruments increasing certain tax rates like the PAL, GST etc. rate and simplifying the system of taxation by revising the number of taxes to be paid such as NBT, PAYE and WHT. The efficiency of tax collection will be improved through the introduction of an online – managed single Special Goods and Service Tax (GST) at maximum possible rate on alcohol, cigarettes, Telecommunication, betting and gaming and vehicles, which accounts for 50 percent of the income from taxes and levies.
Further, it was proposed to simplify the Taxes on Capital Gains, where such taxes will be calculated based on the sale price of a property or the assessed value of a property whichever is higher and to exempt the tax on dividends of foreign companies for three years. A clear and firm policy of taxes on private capital designed to reduce public debt, reduce inequality is also under consideration for inclusion in Budget 2022.
Total expenditure computed for 2022 stands at around Rs 4 trillion, a marginal decline of about Rs. 30 billion from the approved allocations for 2021.
In addition, over Rs. 384 billion has been cut off from 54 ministries (spending units-SUs) to finance the expenditure increases of other 25 SUs.