The financial budget for 2019-2020 – amounting to 7.02 trillion – was disclosed by the government not even 24 hours ago and it’s become clear that undoubtedly, we are headed towards a Naya Pakistan – for better or for worse!
It is important to keep in mind that this, in fact, is an “austerity budget” according to which there ought to be an increase in taxes and/or spending cuts.
After going through the budget 2019 document, we developed a basic summary of the big ways in which it is likely to impact you.
Income Tax Slabs
The government stated its objective to focus primarily on increasing and regulating taxation. For salaried individuals with earnings exceeding Rs. 600,000, eleven taxable slabs are proposed to be introduced with tax rates ranging from 5% to 35%. The same rates are proposed for non-salaried persons earning an income exceeding Rs. 400,000 along with eight taxable slabs.
In simple words, taxation rates will unquestionably be a huge burden on Pakistan’s middle and lower classes – at least for the next 12 months.
Investing in Healthcare, Education and Social Welfare
The Prime Minister’s biggest upcoming projects include Ehsaas – a new division created for poverty alleviation and social security. This will aim to help the poor, orphaned, widowed, homeless, medically challenged and the jobless with an annual budget of Rs.110 billion.
Furthermore, under this scheme, a ration card system will help feed nutritious food to a million needy people. The government plans on focusing majorly on this initiative and ‘Ehsaas Homes’ for the elderly are already undergoing construction.
Additionally, SehatSahulat; a health insurance scheme for the poor will render services worth Rs.720, 000 (per year) from any of the 270 selected hospitals across Pakistan.
Industrial and Agricultural Development
A number of subsidies and incentives are to be provided to industrials to overcome the stagflation that is eating away at Pakistan. Such as Rs.40 billion subsidies to industries for electricity and gas. Furthermore, as an incentive, steel industry in tribal areas is exempt from paying sales tax.
Pakistan is, at the end of the day, an agro-based economy and therefore, the government is launching a 5 year program worth Rs. 280 billion to uplift the agriculture sector.
This includes an allocation of Rs. 44.8 billion towards increasing the yields of wheat, rice, sugarcane and cotton – some of Pakistan’s most vital agricultural exports. Small scale farmers will get loans to set-up their business and several initiatives to improve livestock farming will be invested in.
Indirect taxation on day-to-day items
Duties are to be imposed on ‘non-essential items’ – including condiments and cheese! Yikes!
Cigarettes, CNG, jewelry (for e.g. gold and silver) and cars are all items that will get too expensive for average citizens to afford easily.
The FED (federal excise duty) on soft drinks is increasing from 11.5pc to 14pc and edible and cooking oils will be charged at 17pc!
In short, the weak-hearted should avoid going to the grocery store until the next budget is announced.