Taxation Proposals for 1994-95

Economic Review, June 1994 | Go to article overview

Taxation Proposals for 1994-95


* Rate of excise duty on gas increased to 6% for domestic and 8% in case of others.

* Consumers paying monthly gas bill up to Rs. 100 per month will have to pay only Rs. 2 additional amount.

* There will be no increase on sugar, edible oil and petroleum products.

* Sales tax not to be levied on essential foodstuffs like meat, eggs, bread, pulses and cooking oil.

* In case of cement, it was decided to switch over to ad valorem rates. Duty on cement will now be on the retail prices. Leather exempted from sales tax.

* Import licence fee has been abolished.

* Withholding tax on the sale of foreign exchange abolished.

The following is the text of taxation proposals presented by the minister of state for finance in the National Assembly on July 9, 1994.

A Pay and Pension Committee was set up last year to recommend the revision of pay and allowances of the government employees and also for officers of the banks and financial institutions. The committee submitted its report for officers/executives of bank and financial institutions in January, 1994 and these recommendations have already been implemented. The report for government employees has been received on 25th May, 1994.

The government is fully conscious of the fact that increase in prices has adversely affected the living standard of the employees with fixed income, it also agrees that the salaries of the employees be raised from time to time to adjust for rise in prices, since, however, the government is faced with a situation where the resources have not been keeping pace with the growth in expenditure, it has become difficult to implement the package recommended by pay and pension committee in one phase. While the government has accepted the recommendations made by the committee for revision of pay and allowances, it has, however, decided to implement those in two phases.

In the first phase the pay of government employees in BPS I-22 and equivalent in armed forces are being revised, it has been decided to allow 35% increase in the new pay scales to civilian employees in BPS I-16 and 20% to those in BPS 17-22, the latter would get the remaining 15% increase from 1-6-95 in the second phase, it has also been decided to abolish secretariat allowance from 1-6-1994 and to convert the amount actually drawn on 31-5-1994 in to personal pay, which in the case of those in BPS 17-22 will be adjusted against future increments. Those in BPS 1-16 will be exempted from this adjustment. Members of Defence services irrespective of their ranks will be allowed an increase of 35% in the new pay scales. A saving of Rs. 6 billion will be effected in the pensions and gratuity of Defence services by enhancing their age of retirement by two years. The ad hoc reliefs allowed since 1-6-1991 will, however, be fully adjusted. Allowances, including House rent allowance, will be maintained at the levels drawn on 31st May, 1994.

The government has decided to provide relief to the widows, dependent retarded and incapacitated children and invalid pensioners with effect from 1st June, 1994 as listed below:-

a) Restore the commuted value/gratuity portion of pension of families on completion of required period.

b) Grant family pension to a dependent disabled/retarded children for life without any age limit.

c) Eliminate second medical board for the invalidated pensioners for eligibility of commutation.

d)Enhance constant attendant allowance presently admissible to the disabled armed forces personnel from Rs. 1000/- to Rs. 1500/- per month.

The above measures will result in increase in expenditure of Federal government for 1994-95 of about Rs. 4.7 billion. It has been decided to meet this expenditure internally through adjustment in expenditures. The additional resource mobilization, which I am about to state will result in reduction in debt servicing amounting to Rs. 2.5 billion.

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