Transcript Impact of Budget on Economy - Karachi Tax Bar Association

The Income Tax Bar Association
Karachi
POST BUDGET
SEMINAR 2010
Impact of Budget on Economy
Presenter :
Syed Masoud Ali Naqvi
Marriott Hotel, Karachi.
Monday, 7 June 2010
Budget at a glance
(Rupees in Billions)
Budget
Revised
Budget
Estimate
Estimate
Estimate
2009-10
2009-10
2010-11
REVENUE
Non Tax Revenue
Less Provincial Share
Net Capital Receipts
External Receipts
Self Financing of PSDP by
Provinces
Change in Provincial cash
balance
Privatisation Proceeds
Bank Borrowings
GLOBAL MARKETS
Impact of Budget on Economy
513.7
2,007.2
655.2
1,352.0
190.5
510.4
173.0
568.9
2,051.9
655.2
1,396.7
260.3
578.0
183.9
632.3
2,411.0
1,033.6
1,377.4
325.4
386.6
341.6
72.9
77.6
166.9
19.3
144.2
2,462.3
89.1
2,585.6
166.5
2,764.4
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
2
Budget at a glance
(Rupees in Billions)
Budget
Revised
Budget
Estimate
Estimate
Estimate
2009-10
2009-10
2010-11
REVENUE
Tax Revenue
Direct Taxes
Income tax
Others
Indirect Taxes
Customs
Sales tax
Federal excise
Carbon Surcharge on POL/CNG
Others
GLOBAL MARKETS
Impact of Budget on Economy
544.5
21.1
565.6
520.4
20.0
540.4
633.0
24.7
657.7
162.2
499.4
152.8
112.0
1.5
927.9
1,493.5
164.9
540.3
134.4
101.5
105
942.6
1,483.0
180.8
674.9
153.6
110.0
1.7
1,121.0
1,778.7
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
3
Impact of Budget on Economy
Key objectives for the Budget 2009-10
Provide protection to poor
and vulnerable against the
current economic
downturn.
Revive manufacturing and
industry, especially export
oriented industry.
Key Objectives
Broaden tax base, instead
of overburdening the
existing tax payer.
GLOBAL MARKETS
Restrain unnecessary
imports to improve the
Balance of payments
position.
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
4
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
5
Impact of Budget on Economy
Economic Analysis
Sectoral Contributions to the GDP growth
(% Points)
2004-05
2005-06
2006-07
2007-08
2008-09
2009-10
Overall GDP
9.0
5.8
6.8
3.7
1.2
4.1
Agriculture
1.5
1.4
0.9
0.2
0.9
1.0
Industry
3.1
1.1
2.3
0.4
-0.5
0.6
Services
4.4
3.3
3.6
3.1
0.8
2.5
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
6
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
7
Impact of Budget on Economy
Economic Analysis
Sectoral GDP growth
(% Points)
1980s 1990s 2002- 2003- 2004- 2005- 2006- 2007- 2008- 200903
04
05
06
07
08
09
10
Agriculture
5.4
4.4
4.1
2.4
6.5
6.3
4.1
1.0
4.0
2.0
Manufacturing
8.2
4.8
6.9
14.0
15.5
8.7
8.3
4.8
3.7
5.2
Services
6.7
4.6
4.7
7.5
9.0
5.8
6.8
3.7
1.2
4.1
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
8
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
9
Impact of Budget on Economy
Economic Analysis
Sectoral Share in GDP
(% Points)
2001- 2002- 2003- 2004- 2005- 2006- 2007- 2008- 200902
03
04
05
06
07
08
09
10
Others
7.9
7.3
8.2
8.0
7.0
7.3
6.6
6.7
6.7
Services
52.1
52.4
51.6
51.3
51.7
51.8
52.9
53.1
53.3
Manufacturing
15.9
16.3
17.3
18.3
18.8
19.0
19.2
18.3
18.5
Agriculture
24.1
24.0
22.9
22.4
22.5
21.9
21.3
21.9
21.5
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
10
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
11
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
12
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
13
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
14
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
15
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
16
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
17
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
18
Impact of Budget on Economy
Economic Analysis
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
19
Impact of Budget on Economy
Economic Analysis
Subsidies
(Rupees in Billions)
Budget
2008-09
Revised
Estimates 2008-09
Budget
2009-10
WAPDA
63
147
84
KESC
4
33
3
TCP (Wheat & Sugar)
30
30
17
USC
4
4
4
Oil Refineries / OMC /
Others
15
11
11
Others
4
4
7
120
229
126
Current
TOTAL SUBSIDIES:
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
20
Impact of Budget on Economy
Budget for a ‘Common Man’
Key Drivers
Welfare of the people
Reduce unemployment
and create more jobs
Reduce inequity of
distribution of resources
and income
Target reduction
of Poverty
Focus on Agriculture
value addition,
productivity and research
Rationalize subsidies
Skills development
Improve Tax GDP ratio
Direct cash transfers
Enhance social sector
allocations
Micro-finance reach
Induce growth of
manufacturing sector and
productivity
improvement
Skills Development
And Training
GLOBAL MARKETS
Provide quality health
and other services at
affordable costs
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
Inflation target
21
Impact of Budget on Economy
Common Man’s Perception of Economic Development
 Food at affordable prices
 Health support on efficient basis
 Housing and shelter
 Access to utilities (water, power, gas, telephone) on consistent basis at
affordable cost
 Education
 Good quality at low costs
 Aligned to required skills and vocational development demand
 Employment opportunities – Massive investment in human capital
 Freedom of access to information
 Value for contribution to federal, provincial and local revenue
 Potential for vertical migration in terms of quality of life and a mechanism to
balance consumption and savings
 Good governance
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
22
Impact of Budget on Economy
Common Man’s Perception of Economic Development
 Inflation
 Supply side planning and reforms
 Balance between consumption and savings
 Strengthening of direct government intervention
 Import Substitution
 Inequality  Growth to be inclusive
 Ensuring efficiency and productive utilization of PSDP
 Accelerated focus on Social sector
 Social
Sector
 Reallocation of resources from general administration, defence; etc.
 Raise revenue from Financial Services and other Profitable
Sector like trading etc. for direct transfer to social sector to be
managed by an independent representative body
 MDG’s to be real goals rather than compliance of
commitments. These goals should be dynamic and progressive
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
23
Impact of Budget on Economy
Key objectives for the Budget 2010-11
Protect the economic recovery
by reinforcing the fiscal
austerity.
Reform and enhance social
protection regime by
innovative schemes, better
targeting of the subsidies for
the needy and eliminating
waste.
Check inflation and restrict
borrowings from the State
Bank.
Reduce the burden of public
sector enterprise.
KEY
OBJECTIVES
Generate employment
opportunities.
GLOBAL MARKETS
Achieve a measure of self
reliance through better
domestic resource
mobilization and to reduce
reliance on borrowings.
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
Make country fertile for
investment by improving
governance & markets and
emphasizing on productivity
& efficiency.
24
Impact of Budget on Economy
Challenges
Marshal plan for improvement of Governance
Sustainability of growth momentum
Addressing structural problems in energy, agriculture and exports sector
Job creation
Poverty alleviation
Improving social indicators and enhancement of efficiency of safety nets
Strengthening of physical infrastructure
Converting the demographic transitions into demographic dividend
Leverage the current strategic role in achieving meaningful economic dividends
Supply side improvement to match growing domestic demand
Achieve political stability and institutional strengthening
Harmonious relationship amongst Federation and its units
Equitable distribution of resources between Federal, Provincial and Local
governments
 Revenue generation by provinces
 Balanced approach of combination of Fiscal and Monetary Policy measures to
combat inflation
 Containment of exposure to war on terror













GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
25
Impact of Budget on Economy
THANK YOU !
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
26
Impact of Budget on Economy
Presenter’s contact details
SYED MASOUD ALI NAQVI
Country Senior Partner
KPMG Taseer Hadi & Co.
+92 (21) 3568 5847
[email protected]
www.kpmg.com.pk
GLOBAL MARKETS
© 2010 KPMG International. KPMG International provides no client services and is a Swiss cooperative
with which the independent member firms of the KPMG network are affiliated.
27