Govt to provide relief to weaker segments in budget: Hafeez
MABAD (APP) - The government is determined to bring the weaker segments of the society into economic mainstream by providing them the targeted subsidies in budget 2010-11 by diverting the resources from privileged class to poor in the country.
This was stated by the Advisor to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh while addressing the launching ceremony of Third Annual Report 2010: State of Pakistan Economy Pulling Back from the Abyss, here on Tuesday.
The report was launched by the Institute of Public Policy Beaconhouse National University, Lahore with an aim to highlight the state of national economy during last year, besides suggesting policy proposals for upcoming budget 2010-11.
He said that poor segments of the society would be safeguarded and provided relief through Benazir Income Support Program (BISP), adding that privileged class would not be allowed to use the name of poor for their own benefits.
Instead providing the relief to the poor, subsidy regime was harming the national economy as the government was providing billion of rupees in terms of subsidies to PIA, PEPCO and Pakistan Steel Mills adding that the losses of PSM has reached to Rs 1 billion per month.
The government, he said would bring reforms in these institutions under public sector reforms programme for controlling their leakages and turn it into profit-oriented organisations. Dr Hafeez said that maintaining the economic stabilisation achieved by the government and sustainable economic development would be on the top of government priorities while preparing the Federal Budget 2010-11 for the socio-economic prosperity of the country.
He said that government would provide funds for Public Sector Development Programme on priority basis for early completion of these projects adding that PSDP for the year 2010-11 was also increased.
Pakistan has approached the International Monetary Fund keeping its own financial requirements adding that it was a soft programme and helped the economic recovery and stabilisation, he added.
Replaying to a question, he said that government has make a commitment with IMF to increase the electric tariff, when it would be implemented it would implemented from April 2010.
The advisor said that it would be the first post NFC Award budget and the share of the provinces has been increased which also increased the responsibilities of the provinces.
Dr Hafeez said that to fulfil the financial requirements and to bridge the fiscal gap by own resources it was essential to increase the existing tax to GDP ratio which currently stood at only 9 per cent.
Highlighting the importance of the Value Added Tax (VAT), he explained that VAT is not a new tax adding that it was only substitute of General Sales Tax which would help generate additional revenues.
VAT would also help documentation of national economy and the people opposing it do not want a documented economy and wanted to evade taxes. He informed that education, health and food items beside people having less than 7.5 million per annum turnover would be exempted from VAT. The advisor said that government would welcome the positive proposals and suggestions from the business community about the tax administration reforms and other reforms to enhance the tax revenues as well as to facilitate the taxpayers.
Speaking on the occasion, Dr Hafeez Pasha said that national economy was recovering, inflation was also reduced besides improvement in balance of payments.
He said that cuts in PSDP would bring negative effects for the national development.