Karachi: The budget for FY12 has been focused mainly on tax reforms and to meet other conditions imposed by IMF.
According to Alfalah Securities Limited, Containing fiscal deficit to 4% of GDP and lower fiscal expenditures were some of the key goals of FY12 budget. Govt. has projected GDP growth at 4.2 %, and inflation below 12% for FY12. In order to achieve the targeted inflation, the sales tax has been rationalized by lowering the tax rate by 1% to 16% from 17% while bringing several other areas under tax net. These targets though conservative, would be challenging to achieve considering the political instability, deteriorating law & order situation, ongoing circular debt issue and electricity crises.
These factors would hinder the operational efficiency of almost all the sectors of the economy. Contrary to the expectations, the capital gains tax (CGT) on securities at the rate of 10% for holding period less than six months and at 8% for gains booked up to one year has remained intact for FY12 in the budget. Though, the budget has not put forth any tough decision which would have burdened the masses but it lacks road-map to resolve the many outstanding issues faced by economy like circular debt and energy crisis that has hampered day-to-day business of energy business of the country.