ISLAMABAD: The Pakistani government is set to present a federal budget of Rs18 trillion in the National Assembly on Wednesday, emphasizing increased defense spending, new taxes, and pension system reforms.
Government employee salaries are expected to see a 10-15% increase, with Rs2.1 trillion allocated to defense.
The budget outlines Rs9.5 trillion for interest and debt payments, while initial estimates for non-tax revenue are also included.
New taxes and the removal of sales tax exemptions are anticipated to increase the tax burden. Proposed measures include higher sales taxes on various goods, increased withholding tax, and customs duties.
The government aims to collect Rs12.9 trillion in tax revenue by implementing a 5% sales tax on petroleum products, raising the GST by 1%, and eliminating unnecessary tax breaks, among other strategies. These measures are expected to generate an additional Rs2 trillion in revenue.
Projected revenue from petroleum levies exceeds Rs1050 billion, and the removal of sales tax exemptions is expected to generate an additional Rs5.5 trillion.
The State Bank of Pakistan has cut the key rate to boost the economy, and the budget aims to pave the way for an IMF bailout.
Sales tax is proposed on agricultural goods, seeds, fertilizers, tractors, and other equipment, with a 10% sales tax on food, medicines, and stationery under consideration. Rs800 billion is allocated for energy sector subsidies.
Pension reforms include a voluntary contributory pension system for new recruits, limiting retired employees’ pensions to 20 years instead of lifetime benefits.
Family pension duration is proposed to be reduced to 10-15 years, with the daughter’s pension eliminated and commutation benefits reduced.
Infrastructure is allocated Rs827 billion, energy Rs253 billion, transport and communication Rs279 billion, water projects Rs206 billion, social sector Rs280 billion, and healthcare Rs45 billion.
Additionally, Rs93 billion is allocated for education and higher education, Rs75 billion for SDGs, Rs42 billion for agriculture, Rs28 billion for governance, Rs79 billion for science and IT, Rs64 billion for merged districts in Khyber Pakhtunkhwa, and Rs75 billion for Azad Kashmir and Gilgit-Baltistan.
