Pakistan Federal Budget FY 2020-21: Analysis and Discussion Thread

[Baghial]

PTI government is presenting the federal budget for finical year 2020-2021 today in the national assembly. Please use this thread for discussing small budget points, appreciation and condemnation (which will surely be coming).

IN wake of COIVD-19 i am not expecting a great budget anyway but as per some rumors in business circles, it looks that thankfully there wont be additional tax burden put on exports. Little relief lower income people also expected.

BUDGET 20-21
BULLET POINTS

1- No new tax to give relief to people
2- Ahsas program to continue by increased budget
3- To improve tax collection
4- To decrease in govt. expenditure
5- To improve subsidy system
6- Poverty elevation program
7- Higher education budget increased
8- Measures taken to improve remittances
9- Kamyab Naujawan program budget introduced
10- To improve public services through E-governance
11- Artist welfare fund increase
12- Inflation to be decrease
13- FBI increase by 25%
14- To improve health services by ICT
15- To open smart schools
TAXES :
16- POS of retailer business to increase
17- 14% to 12% sales tax on retailers
18- Hotel minimum tax decrease to 0.5% July to September
19- Fixed tax scheme introduced for Small and medium businesses
20- Export rebate, to direct transfer in business bank accounts
21- Raw Material fully exempt from custom duty to respective nature of businesses having 20000 items
22- Custom duty of 200 items in tariff line decrease
23- PRD to decrease
24- Poor people benefits --- corona—supplements etc to be exempted from duties and taxes
25- Custom official powers has been decreased
26- Inclusive of advance ruling methods in custom law
27- Unregistered sales tax person—CNIC condition from 50 thousand to one lakh
28- Covid 19 sales items exemption period increased
29- 237 sro for relief extended for further 3 months
30- 11th schedule of sales tax to improve
31- Increase in FED in all type of cigarettes and its articles increased to 100%
32- Caffine items FED from 13 to 25%
33- Double pick up FED to be taxed as other vehicles
34- 17% sales tax on potassium cholaride decrease
35- 14% sales tax decrease to 12% of big retailers
36- Wastage to fixed in manufacturing business
37- 12 schedule sales tax of VAT—manufacturers no sales tax
38- Cement sector decrease from 2 to 1.75 per kilo
39- If Appeal than reference can be made to following years
40- ADRC law to be change
41- STAY provision to be made in ADRC
42- FED law to be enhanced
43- Sales tax act 9th schedule mobile phone manufacture decrease in sales tax
44- E Audit / video link introduced for audit
45- Online sharing of assess data introduced
46- WHT Regime to delete 9 sectors (Education and marriage hall etc)
47- Commercial importer and manufacturer importing on raw material and machinery from 5.5 top 2% and 1%
48- Machinery examination certificate abolished
49- Aop and individual allowed expenditure to be claimed against property Income
50- Foreign remittances transfer from one bank to another – no tax on that
51- Tax Refund procedure – now changed – one centralized system introduced
52- 152 WHT of non resident for Hajj Companies
53- Advance tax abolished under section 231b and 234 on rickshaw and cars
54- Advance tax payment threshold increased
55- Exemption certificate through automation system
56- Schedule 12 Exemption certificate for advance tax to be produced by person who had already paid advance tax
57- RIET residential properties CGT period extended
58- Free Zone benefits also to be given modern developers
59- To simple law and business only for PE tax deduction to be made
60- Tax deduction under section 235 now fully adjustable
61- Inclusion in Active tax payer list, proper enquiry to be conducted
62- Automatic return process system to be introduce for any error in return if any
63- For and increase in data base and WHT 236V to be introduce
64- Non resident and resident tax should be same
65- Purchase and leased vehicle threshold to be same
66- Depreciation to be as per best international practice
67- NPO status per 2nd schedule section 100C condition to be strictly followed and only those NPO be there who benefits the community in general
68- 10% tax to be paid while filing appeal
69- Auto system advance tax to introduce through IRIS by 5th of every advance tax due date
70- CGT on Immoveable property decrease from 5 years to 4 years
71- Non Resident- royalty, fees etc to be decrease


72- FTR to be filed with section 114
73- Appeal fees increased
74- Section 165 WHT for bio annual now to be filed by 3 months instead of 6 months
75- Immoveable taxation CGT from 8 to 4 years and every year decrease by 25%


File attached, Salient features of budget 2020-21

جن دیہاڑی داروں کی فکر وزیراعظم کو ستا رہی تھی اُن کے لئے بجٹ میں پورے 1402 ارب روپے رکھے گئے ہیں۔

 

[Norwegian]

And even if he did, there was no reason to agree unconditionally to every single demand.

When you go to a lender such as commercial bank, do you get to decide terms or the bank manager? IMF is a lending institution. Pakistan must accept all its demands to stay afloat. Other choice is not go to IMF and stand on your own feet.

جن دیہاڑی داروں کی فکر وزیراعظم کو ستا رہی تھی اُن کے لئے بجٹ میں پورے 1402 ارب روپے رکھے گئے ہیں۔

Your anti army Bughaz is not going to help. Defense spending is still 18 percent of total budget

 

[CriticalThought]

Tell that to Venezuela or Argentine

Again partial quote. Shame on your shamelessness. And on top of that, an incorrect example.

I said printing money only to the extent of paying salaries to the poor. This doesn't create an artificial increase in demand that would cause inflation. It keeps demand stable. Now if you keep increasing interest rates, you will need to keep printing money to give to the poor as well. And before you ask the question, the way out of this circle is to increase human development and create opportunities for real growth. The IMF prescription never includes human development. Venezuela and Argentina are the final result of blindly following IMF diktats by corrupt and puppet governments.

 

[Norwegian]

Venezuela and Argentina are the final result of blindly following IMF diktats by corrupt and puppet governments.

No, they are examples of not following IMF dictates. Both nations are continously printing money causing hyper inflation and total collapse of their economies. IMF policies never lead to this

 

[CriticalThought]

By not going to IMF, Pakistan would have defaulted on its foreign debts and end up with hyper inflation situation just like Argentine and Venezuela these days

The result of defaulting is not hyperinflation. I asked a friend here in Australia whose job is to employ mathematical models to find investment opportunities. He pointed at the Russian model. Russia decided to default, and used the money that would otherwise go towards debt servicing to induce real growth.

Just the threat of default can be a powerful bargaining chip. These are 100 billion dollars that IMF needs from us. Let that sink in. We can use this bargaining chip to formulate an IMF plan that induces human development and real growth in the economy. But the traitors need any excuse to enslave the entire country to fulfill the interests of their masters.

 

[Norwegian]

I said printing money only to the extent of paying salaries to the poor. This doesn't create an artificial increase in demand that would cause inflation. It keeps demand stable.

Money printing doesn't solve any economic problem. US and European Central Banks have non stop printed money since the Great Financial crisis of 2008. This hasn't solved a thing. We are now back to square one.

 

[Baghial]

budget 2020 for dummy,s

 

[Norwegian]

The result of defaulting is not hyperinflation.

It is. Historic examples: Weimar Republic (Germany) before the rise of Hitler. Zimbabwe. Argentine. Venezuela

 

[CriticalThought]

When you go to a lender such as commercial bank, do you get to decide terms or the bank manager? IMF is a lending institution. Pakistan must accept all its demands to stay afloat. Other choice is not go to IMF and stand on your own feet.


Your anti army Bughaz is not going to help. Defense spending is still 18 percent of total budget

No, they are examples of not following IMF dictates. Both nations are continously printing money causing hyper inflation and total collapse of their economies. IMF policies never lead to this

Don't act extra smart. I have access to someone who has worked in the World Bank. His words "Today, the IMF is bankrolled by Venezuela, Argentina, and Pakistan". And this is done by ensuring that favorable corrupt and puppet governments are installed so they can further continue the cycle of slavery.

Money printing doesn't solve any economic problem. US and European Central Banks have non stop printed money since the Great Financial crisis of 2008. This hasn't solved a thing. We are now back to square one.

Did I say it 'solves economic problems'? It is a stop gap measure to help the poor.

 

[Norwegian]

Just the threat of default can be a powerful bargaining chip. These are 100 billion dollars that IMF needs from us. Let that sink in. We can use this bargaining chip to formulate an IMF plan that induces human development and real growth in the economy.

You cannot threaten IMF as the loans are made against Pakistani assets both at home and abroad. Declare default and all foreign money will leave Pakistan, causing hyper inflation. IMF would then forcibly take over and sell Pakistani assets to recover its money.

 

[CriticalThought]

It is. Historic examples: Weimar Republic (Germany) before the rise of Hitler. Zimbabwe. Argentine. Venezuela

Only for fools like you who do not understand the nuisances of the situation. Stop one liner useless replies that ignore the reality of the situation.

 

[Baghial]

When you go to a lender such as commercial bank, do you get to decide terms or the bank manager? IMF is a lending institution. Pakistan must accept all its demands to stay afloat. Other choice is not go to IMF and stand on your own feet.


Your anti army Bughaz is not going to help. Defense spending is still 18 percent of total budget

you can put as many crow eggs under your chicken,

but the result will be same everytime.............lame chicken

 

[CriticalThought]

You cannot threaten IMF as the loans are made against Pakistani assets both at home and abroad. Declare default and all foreign money will leave Pakistan, causing hyper inflation. IMF would then forcibly take over and sell Pakistani assets to recover its money.

Pakistan doesn't have assets worth 100 billion dollars, and IMF knows that.

 

[Norwegian]

budget 2020 for dummy,s

How pmln achieved that growth for dummies

His words "Today, the IMF is bankrolled by Venezuela, Argentina, and Pakistan". And this is done by ensuring that favorable corrupt and puppet governments are installed so they can further continue the cycle of slavery.

So if you are so smart, stop going back to IMF. What is this love hate relationship? You want aid from IMF every 5 years but refuse to follow their demands?

Did I say it 'solves economic problems'? It is a stop gap measure to help the poor

Help the poor? Government or State of Pakistan itself cannot stand on its own feet

Only for fools like you who do not understand the nuisances of the situation. Stop one liner useless replies that ignore the reality of the situation.

Things that are happening to Pakistan have already happened in other countries. Why should they not be relevant to learn next course of action?

 

[Patriot forever]

They are all losers, PML N, PPP, PTI. Let's get this out of the way.

And you have only partially quoted me. I said interest rates are increased when it is determined that an increased money supply has led to inflation. You are continuously and conveniently ignoring the money supply factor. Inflation can increase because of cartelization/monopoly/oligarchy. Should the government increase interest rates? No! Inflation can increase due to artificially created supply shortage. Should the rates be increased? No! Inflation can increase because a class division exists where an increasingly rich class is exploiting the poor and aggrandizing the resources within the country. Should rates be increased? No!!! This last one is the reality of Pakistan. Still, the puppets increased interest rates on the demands of their masters because this actually leads to increase in inflation. Just as a higher interest rate can curb inflation, an artificially high interest rate can be use to induce inflation so that the people at the top can mint more money. This is the IMF prescription which traitors on this forum shamelessly defend by saying things like "Yes, don't pay taxes then ask for XYZ", or "This is short term pain we have to go through".

Second, what you are saying about state bank 'pulled the money out of market' is absolute hogwash. The state bank has been continuously printing money which the IMF 'lord' Hafiz Shaikh tried to curb. I spoke out against that measure, because had that happened, there would be an actual shortage of money and State of Pakistan would be unable to pay salaries. This was the last straw that broke the camel's back, and Hafeez Shaikh has since taken the back seat. So although the interest rate has increased, it has led to increased inflation whereby businesses are charging consumers more for the same services. This is how IMF is making its money, as I explained in the last para as well.

I agree with the points you raised. I specifically mentioned in my original post that (apart from the points you mentioned) inflation was largely as a result of shock of devaluation of rupee and yes this inflation was highly disproportional (due to cartelization/monopoly/oligarchy). The factors you mentioned were already in the market but this devaluation sparked the spike. The point I was making was interest rates were increased to balance of the inflation and stop from getting over board, lower interest rate acts as a positive catalyst. At the end of the day the injection in market was balanced out by increase in deposits in banks which reached at a record level. It restrored the balance but it came at a significant cost. I agree with the businesses charging consumers more because of increased interest rates, but at the end of the day there was lower demand aswell. Even property prices fell because investing in bonds or maintaining a saving account seemed more lucrative.
I am against IMF aswell, but we had no other choice given our external account deficit, on the other hand was bankruptcy which is far more painful. I always consider going to IMF as going to a police station, unless you commit a crime they won't bother you. We should try to keep as far away from IMF as possible but for that we need to correct our macroeconomic faults.