As the eagerly awaited Budget 2024 approaches, citizens across the nation are filled with a blend of hope and apprehension. This annual fiscal event holds the potential to shape the economic landscape and impact the lives of millions. However, based on proposals and news reports, we can explore the potential effects on various products, sectors, and individual finances. With expectations running high, let’s explore into what experts and citizens alike anticipate from this pivotal budget announcement.
Retailers who choose not to use the Point of Sale system, according to media reports, will be subject to extra audits. According to reports, the Track and Trace system will be expanded to include the tiles industry, and steps will be done to connect business output with sales tax returns.
FBR Forecasts
The upcoming budget may include an increase in bank withdrawal taxes after talks between the IMF and Pakistani officials. It is projected that an advance tax on cash withdrawals may raise Rs15 billion a year.
FBR also suggested raising the withholding tax from 0.6% to 0.9% on cash withdrawals made by non-filers; this change could result in an additional income of Rs15–Rs20 billion. A 0.6% withholding tax would also apply to non-filers’ withdrawals through credit cards or ATMs that exceeded Rs50,000 in a single day.
According to FBR projections, voluntary revenue collection (based on GDP growth and inflation) will cross Rs 1,150 trillion in FY25. Additionally, the federal government will consult with the IMF before deciding on revenue measures.
In the last budget, the government announced revenue measures totaling 415 billion rupees. The FBR has proposed to increase the tax-free limit for salary brackets to Rs 1.2 million in 2024-25.
However, this application will be filed on the basis of increasing inflation and the existing exemption limit will be revised downward from 600,000 rupees to 900,000 rupees.
The FBR also discussed the functioning of pension tax with the IMF. The IMF’s goal is to adjust pay levels to match pensioners’ incomes. However, the FBR’s activities are limited to pensions for federal employees. Pensions for federal government employees are estimated to be around Rs 7,000 billion. The FBR opposes the introduction of a salary cap on pensioners’ incomes and suggests alternative mechanisms to tax wealthier pensioners.
The fiscal measures may focus on sectors such as healthcare, tax reforms and subsidies to drive recovery and ensure long-term sustainability. The emphasis on job creation and skill development is also expected to feature prominently in the budgetary agenda.
Taxes: Relief or Restructuring?
Tax reforms and targeted subsidies may be explored to provide relief to middle and lower-income segments. Additionally, measures to enhance agricultural productivity and ensure food security are anticipated to address concerns over food inflation.
Individual taxpayers might see some relief measures in the form of increased tax slabs or higher deduction limits for specific expenses, as reported in various news sources. The new tax regime might also be made more attractive to encourage its adoption. Businesses, on the other hand, could see a broader tax base or streamlining of the Goods and Services Tax (GST).
More FED’s on cigarettes?
SPDC’s new policies specifies that, “Recovering Healthcare Costs and Saving Lives that aligns recommendations of World Health Organization (WHO) and Campaign for Tobacco Free Kids (CTFK).“
Public health advocates have called for a significant increase in Federal Excise Duty (FED) on tobacco products. Proposals suggest a jump of 37%, as reported by the Social Policy Development Centre (SPDC).
This could lead to a noticeable rise in cigarette prices, potentially deterring consumption.
The SPDC policy further highlights the potential for this measure to generate additional revenue for the government (Rs 37.7 billion) and encourage smoking cessation (757,000 people quitting).
Dr. Nadeem Jan, former Federal Minister for National Health Services, also emphasized the importance of higher taxes as a warning in a recent interview.
Fuel levy to be increased?
The impact on petrol prices remains uncertain. The government could choose to increase the fuel levy, leading to a rise in petrol prices, maintain current rates, potentially affecting funds allocated for infrastructure development projects. In rare cases, even reduce fuel taxes to provide temporary relief.
As Budget 2024 emerges on the horizon, expectations are widespread for a comprehensive fiscal roadmap that addresses the diverse needs and aspirations of the nation. While uncertainties persist, there is optimism that prudent policy interventions and strategic investments will pave the way for inclusive growth and prosperity.
However, it’s essential to recognize that budgetary decisions are complex and multifaceted, influenced by various economic, social, and political factors. As citizens, our role extends beyond mere anticipation; it encompasses active engagement and constructive dialogue to shape policies that truly reflect the collective welfare of society.
As the budget unfolds, let us remain vigilant and participative, holding our representatives accountable and advocating for measures that foster sustainable development, social equity, and economic resilience. While these are potential impacts based on proposals and expectations, the final budget might differ. To understand the actual effects, it’s crucial to stay updated once the budget is finalized.
