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Fiscal policy of Pakistan 2015-16
Fiscal policy tools in Pakistan include government expenditures, revenues, and taxes. The government budget for 2015-16 aimed for 4.5% economic growth through revenues of Rs. 4,451 billion and expenditures of Rs. 969 billion for development and Rs. 3,482 billion for non-development. Direct taxes included income tax at 20% and corporate tax at 33%. Indirect taxes were sales tax and customs and excise duties, while non-tax revenue came from property, enterprises, and interest.
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Fiscal policy of Pakistan 2015-16
- 3. Fiscal Policy ofPakistan Definition According to Semuelson: fiscal policy is concerned with all those activities which are adopted by the government to collect revenues and make the expenditures so that economic stability could be attained without inflation and deflation”
- 4. Objectives of fiscalPolicy 1.Economic growth 2.Full employment 3.Optimum allocation of economic resources 4.Increasing rate of investment (6.50% - may 2015) 5.Reducing inequality of income and wealth 6.Controlling inflation
- 5. Tools of Fiscalpolicy Government expenditures Government revenues Non tax revenue Tax revenue Non- Development Development
- 7. Budget of Pakistan2015-16 o Budget : An estimate of costs, revenues, and resources over a specified period, reflecting a reading of future financial conditions and goals. Process of preparing budget of Pakistan: 1. Preparing of budget 2. Consideration debts and approval of budget 3. Communication of grant 4. Execution of budget 5. Post budget allocation 6. Post audit
- 8. Budget of Pakistan Revenues: •4.451 economic growth is expected (direct taxes 13457 billion) and (indirect taxes 1755 billion) Expenses: • Pension increased by 7.5% • Markup rate of Business Youth Loan Scheme reduced to 6% • Rs600 billion for agriculture sector.
- 9. • Rs 20.88billion for health sector. • Rs71.5 billion for education • Rs 159.6 billion for national high way authority • Rs151 billion for security for CPEC route • Rs78 billion for Pakistan Railways • Rs100 billion for TDPs • Rs 30.4 billion for Pakistan atomic energy commission • Rs20.5 billion for HEC • Rs 112.28 billion for wapda • Rs 19600 mw for electricity
- 11. Government expenditures • Governmentexpenditure is the spending made by the government to achieve the fiscal objectives and increase the general welfare of the people • Basic objective of these spending is the welfare of the society • Total expenditures incurred during 2015-16 Rs 4,451 billion
- 12. Types of governmentexpenditures Development or capital expenditure Incurred for development purpose. Include expenditures incurred on long term planning projects • Irrigation • Transport • Communication • Industrial and agricultural development • Railway, social welfare ,health projects, education schemes • and on the projects of water ,gas and electricity etc. • 2015-16 Rs 969 billion • The share in total budget outlay was 21.8%
- 13. Include expenditures incurredon day to day functioning: • Defense • Economic, community and social services • Maintenance of law and order, • General administrator • Debt servicing • Government subsidies etc. Non Development or current expenditure Current expenditure 2015-16 Rs 3,482 billion. • The share in total budget outlay was 78%
- 14. Government expenditures financedby these sources • Internal source: include recoveries of advances and loans, floating and permanent debt ,savings schemes of the government etc. • External source: Foreign aids which includes project aid ,technical aid ,grants etc.
- 16. Direct taxes Disadvantages • Lumpsum amount • Evasion • Arbitrary Advantages • Economical • Fairer • Elasticity Definition: Direct tax is the tax that is directly paid by the person on whom it is imposed. And direct tax is current ratio is 0.8%.
- 17. Types of Directtaxes • There are four types of direct tax. o Income tax this type of tax current ration is 20% o Property tax this type of tax current ratio is 0.0% o Corporate tax this type of tax current ratio is 33% o Wealth tax this type of tax estimated on total wealth of a person.
- 19. Indirect taxes Disadvantages • Thesetaxes are paid by everyone. • Indirect taxes are regressive in nature. • Indirect taxes are inflationary. Advantages • Indirect taxes evasion is almost impossible. • Indirect taxes are not painful. • Indirect taxes are equitable and elastic. Definition: Indirect tax is the tax which is not paid by the person on whom it is imposed and its burden is shifted to someone else
- 20. Types of Indirecttaxes Sales tax : A sales tax is a consumption tax imposed by the government on the sale of goods and services. Custom duty : Customs taxes are applied to imported and exported products. Excise duty: it imposed on the producer and is shifted to the consumer
- 22. Non-Tax revenue • Incomefrom property and enterprise • Profit from post office and telegraph • Trading profit • Interest receipts • Surcharges
Editor's Notes
- #15 1. floating debt short-term government borrowing, esp. by the issue of three-month Treasury bills 2. Long term debt Long-term debt or equity financing. In general, permanent financing is used to purchase or develop long-term fixed assets like factories and machinery