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Sunday, May 23, 2010

Budget deficit estimated at Rs 703bn for 2010-11

* RAC calls Rs 1.711 trillion tax collection target ‘ambitious’
* Proposes exempting health, education sector from VAT levy

By Sajid Chaudhry

ISLAMABAD: The consolidated budget deficit for the next fiscal year 2010-11 is estimated at Rs 703 billion, and the deficit will be financed through borrowing from internal and external sources, meetings of the Economic Advisory Council (EAC) and Revenue Advisory Council (RAC) were informed on Saturday.

The EAC and RAC meetings were held under the chairmanship of the prime minister’s advisor on finance and revenue to discuss budgetary proposals and other issues concerning the economy in detail.

Ambition: Official sources said the budget deficit had been worked out on the basis of Rs 1.711 trillion tax collection target for the next year to be assigned to the Federal Board of Revenue, however, the RAC called the proposed tax collection target “ambitious”. Members of the RAC said the proposed tax collection target should be based upon ground realities.

Earlier, the tax collection target for the year 2010-11 was set at Rs 1.600 trillion.

In case the Rs 1.711 trillion tax collection target is revised downwards, the budget deficit will further rise to over Rs 800 billion.

The sources said it was decided in the meeting that the RAC would meet again today (Sunday) to discuss the tax collection target.

The RAC was also informed that debt servicing would consume Rs 672 billion in the next financial year.

Exemption: During the meetings, EAC and RAC members were of the view that education and health sectors should be exempted from the levy of value-added tax (VAT) to give the people access to quality healthcare and education facilities in the private sector.

The meetings were also informed that essential unpackaged food items and life-saving drugs would be exempted from VAT levy, however, a few food items sold as brands and in proper packing would be subjected to 15 percent VAT levy.

Courtesy www.dailytimes.com.pk

 

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