Punjab presents Rs655bn ‘election’ budget
LAHORE: The Shahbaz Sharif government unveiled on Friday a liberal and bountiful budget for Punjab, with a total outlay of Rs654.7 billion which includes an annual development programme of Rs220 billion for 2011-12.
The development budget for the next fiscal is up by 16 per cent, while the non-development expenditures show a jump of 12.5 per cent.
Wearing the appearance of a pre-election budget, the budget presented by minister in charge Kamran Michael revives the yellow cab scheme at a cost of Rs4.5 billion and envisages provision of state land on lease and disbursement of interest free loans of Rs2 billion to the educated unemployed for starting small businesses under the Punjab Rozgar Scheme.
The government has set aside Rs30 billion for ‘pro-poor’ initiatives, up Rs9 billion from the original allocation of Rs21 billion for the outgoing year. A major portion of this allocation — Rs13 billion — will be spent to provide subsidised wheat flour to people and Rs4 billion has been earmarked for subsiding essential food items during Ramazan. The provincial government plans to provide laptops at a cost of Rs2 billion to schoolchildren and sports facilities for the young at a cost of Rs1.6 billion.
In line with the chief minister’s decision to ‘tax the elite’ and in order to make up for the loss of revenue resulting from his decision to shun American financial assistance of around $200 million, the budget launches some additional taxation measures to broaden the tax net and collection.
Many of these will affect the middle class.
The finance bill proposes to increase motor vehicle (token) tax on engine power greater than 1,000CC, imposes an annual water conservatory charge of Rs60,000 on swimming pools which have somehow exclusively been associated with the rich and levies property tax at Rs10-20 per square foot on farmhouses built on four kanals or more of land with minimum covered area of 5,000 square feet.
Moreover, it proposes to tax club membership by imposition of education cess, and fashion shows and musical concerts.
Punjab’s Finance Secretary Tariq Bajwa told this reporter the additional taxation measures would yield no more than Rs1.5-2 billion.
At the same time, the bill seeks to revise the sales tax rate to 16 per cent from 17 per cent in accordance with a federal decision and reduces the entertainment tax to 20 per cent from the existing 65 per cent.
Amid claims of putting the province on the path to economic and financial self-reliance, the provincial tax revenue collection target, inclusive of provincial sales tax on services, has been estimated at Rs88.5 billion, down from the outgoing year’s original target of Rs91.58 billion. The current year’s actual collection is expected to be around Rs75.31 billion. The provincial non-tax revenue target has been scaled down to Rs25.72 billion from this year’s original target of Rs34.19 billion and actual collection of Rs31.15 billion.
It means the province will be largely dependent on funds it hopes to receive from the federal divisible pool of taxes (Rs530.8 billion), straight transfers (Rs6.15 billion) and federal grants (Rs3.48 billion).
The provincial government will obtain foreign loans of Rs48.61 billion from multilateral and other lenders. These include borrowings of over Rs30 billion for budgetary support and project loans of Rs18.61 billion for financing the development spending. The government has received over Rs17.5 billion as budgetary support and project loans against the budgetary target of over Rs52 billion for the outgoing year.
Other major initiatives include recruitment of judges in lower judiciary, coal-based thermal power generation, solar power projects, construction of farm-to-market roads, buying land for a new industrial city along the Lahore-Rawalpindi motorway, Southern Punjab Development Programme (SPDP), rapid rail in Lahore, setting up farmers’ markets, improvement of supply chain of fresh vegetables and fruit for exports, subsidised housing for the poor and subsidising purchase of CNG buses for inter-city routes.
The government claims it will focus on the development of rural and less developed areas and deprived segments of population. Hence, it has allocated Rs70 billion for the development of south Punjab and Rs13 billion for women development (including establishment of new universities). Overall, it says, greater resources have been allocated for social sector (Rs71.63 billion) and infrastructure development (Rs59 billion).