ISLAMABAD: Pakistan will collect more taxes in the next fiscal year, the finance minister announced Friday, presenting a budget aimed at controlling the nation's deficit and reviving an economy battered by years of mismanagement, floods and surging violence by militants. The plan to broaden the tax base, however, is considered far from enough to help fund schools and hospitals that officials say are needed to stem the appeal of militancy in poorer areas of the country. Pakistan's urban elite and landed aristocracy have long avoided paying taxes. Successive governments, beholden to them for political support or part of those groups themselves, have resisted moves to widen the tax base. The government is too weak to implement tax reform measures demanded by international lenders keeping the country afloat. Without enough funds, the government has relied on printing money to address the shortfall and pay interest on its debts, fueling inflation and strangling economic growth. The total budget for the next year was fixed at 2,504 billion rupees ($29.1 billion), with a budget deficit of 850 billion rupees ($9.9 billion), or four percent of gross domestic product (GDP), Finance Minister Hafeez Shaikh said. He said the government had identified 2.3 million new taxpayers, of which 700,000 would pay an unspecified amount in an initial phase. He also announced general sales tax reduction to 16 percent from 17 percent and several measures to generate revenue. In the new budget, Pakistan's government jacked up defense spending and government employees' pensions. It earmarked 495 billion rupees ($5.7 billion) for defense, an 11 per cent increase on the current year. “We stand by our valiant men, who are laying down their lives to safeguard our country,” Shaikh told parliament. “The country has constantly been suffering because of the existing security situation.”
