ISLAMABAD, June 6: The government plans to impose new taxes and increase import duty on luxury items in the budget to overcome shortage of funds, according to Finance Minister Syed Naveed Qamar.

“The government has no other option,” he said, adding that the new taxes “will hit only non-food, non-oil and non-raw material items and import duty will be enhanced on luxury items”.

He said that for the first time since 1965, the government would present details of the defence layout on the Indian pattern, like the number of people employed by the defence forces and financial requirements of the three armed services.

“This time it will not be one-liner defence budget,” he said.

He did not say if the defence budget for the new fiscal year would be lower than last year’s allocation. “Let us leave such details for the budget presentation.”

He said that the budget size would be about Rs2 trillion, with Rs1.25 trillion of revenue.

He said that the government had been successful in mobilising new resources from international financial institutions to supplement internal resources.

“We are receiving new foreign inflows,” he said. When asked if the government would get $3 billion in external support as had been claimed by former finance minister Ishaq Dar, he said, he could not divulge such details.

He also said the economic position was not as precarious as being painted in the electronic and print media.

Asked about the prime minister’s visit to Saudi Arabia, the finance minister said that it would be an “important visit”.

According to sources, the prime minister will seek Saudi oil on “deferred payments” amounting up to $3 billion to meet its funding requirements for the next financial year.

When asked about the Saudi oil facility, the finance minister said that the financial support from the kingdom could be unexpectedly significant. However, he declined to specify the amount, and only said that Saudi Arabia was a true and trusted friend and always supported the Pakistani nation.

Mr Qamar said that the government would offer new incentives to farmers to improve the agricultural productivity. “We will be announcing new wheat support price in September and this will be good for farmers,” the finance minister said. He said that total area under production would be substantially higher because of new incentives to be given to farmers.

However, he said that the government had no plans to levy tax on agricultural income because it was a provincial subject. Also, he said, no decision had been taken to introduce capital gains tax on stock markets. He said some capital value tax (CVT) on real estates was currently in place, but declined to say if the CVT would be enhanced.

Mr Qamar said that the government had identified the number of the poorest of the poor who would get a special relief package, including monthly cash and commodity support during the next financial year. The objective, he said, was to help the poor to fight rising food inflation.