Budget 2022-2023

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For the fiscal year 2022-23, the coalition government announced an austerity-driven budget with a Rs9.5 trillion outlay. It believes that by lowering the GDP growth forecast to 5%, it will be able to reduce the current account deficit and imports for auxiliary purposes. This is exactly the ruling party was aiming for when it proposed a budget that was “growth and investment-oriented,” allowing it to move toward long-term growth. The most serious complaint levelled against the deposed government was that it had overheated the economy by accelerating growth to 6%, resulting in a vicious circle of subsidies in a period of rising oil and food prices around the world. This is why the current government has set an inflation target of 11.5 percent for the coming year, as well as a relief plan for the salaried class and retirees, in addition to providing specific subsidies to the poor. A 15% pay hike for government personnel has been recommended, as well as an increase in the tax exemption slab from Rs0.6 million to Rs1.2 million as a gesture of goodwill. Pensions have only increased by 5%. The government has calculated targeted subsidies of roughly Rs699 billion, including a cash-favor of Rs2,000 per month for individuals with a take-home of less than Rs40,000, after deducting Rs550 billion for civil administration and Rs530 billion for pensions. Small business tax brackets have also been raised from Rs0.4 million to Rs0.6 million. Defence budget with a raise of around 11% stands at Rs1,523 billion, whereas a staggering Rs3,950 billion will go in debt-servicing, which is a whopping 29% climb since last year, apparently owing to the bleeding of the rupee against the dollar. Nonetheless, on the developmental side, the allocation is to the tune of Rs800 billion, which is almost 10% less than previous fiscal disbursal. The tax collection target has been set at Rs7,004 billion, up 20.1 percent from last year, necessitating a professional revamp of the FBR. Similarly, with a projected budget deficit of Rs3,798 billion, the government will be in difficult straits, since it will be forced to adjust oil and energy pricing on a rolling basis in accordance with international regulations. From cigarettes alone Rs200 billion will be taxed, which is Rs50 billion more than last year. However, exemption of customs duty on pharmaceuticals and generous allocation of Rs51 billion and Rs24 billion to education and health, respectively, are some of the loud thoughts of budgetary statistics. A new fixed income and sales tax system for small retailers ranging from Rs3,000 to Rs10,000 collected through electricity bills is an innovative measure, and remains to be seen how it broadens and pacifies the tax base.

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