Islamabad: Pakistan`s Finance Minister Ishaq Dar has said that he can withdraw a 1 per cent increase in sales tax if the defence budget for fiscal 2013-14 is reduced by Rs 50 billion.
Dar made the suggestion on Monday during a meeting of the Standing Committee on Finance of the Senate or upper house of parliament against the backdrop of considerable criticism from politicians for tax increases proposed in his budget.
During the meeting of the Senate committee, Senator Haji Muhammad Adil of the Awami National Party proposed a 50 per cent cut in the military?s non-development non-salary budget.
On hearing the proposal, Dar said that if the parliament could convince the Defence Secretary to reduce the defence budget by Rs 50 billion, he would withdraw his 1 per cent increase in sales tax that is expected to fetch additional revenue of Rs 60 billion, The Express Tribune reported.
Defending his proposals during a discussion on budgetary measures, Dar said: "I am convinced that the military has been given due defence budget, but still the Senators can try to convince the Secretary Defence."
The military had sought over Rs 700 billion but the government allocated Rs 627 billion, he said.
Dar did not talk about the hidden allocations that the military receives over and above its stated budget, the report said.
Dar also ruled out the possibility of lowering tax rates, arguing the move would risk reducing next year’s revenue target of Rs 2.475 trillion.
If the tax target cannot be achieved in the coming year, Rs 540 billion allocated for development spending would be adversely affected, he said.
Pakistan Increased its allocation for defence in its budget for fiscal 2013-14 to Rs 627 billion (about USD 6.32 billion), marking an increase of about 10 per cent over the revised outlay of Rs 570 billion for the current fiscal The allocation for the three defence services amounted to 15.73 per cent of the federal budget of Rs 3.985 trillion.