Monday Jun 15 2020

Punjab government to present Rs2.222 trillion budget today

LAHORE: The Punjab government will present a budget of Rs2.222 trillion today in the provincial assembly with an expected total annual development outlay of Rs338.5 billion. The Punjab Sales Tax is expected to be slashed to 5% for the majority of services. 

Further, the government is going to allow submission of the property tax in two installments due to the Covid-19 pandemic. Punjab will get almost Rs1.439 trillion from the federal divisible pool from the federal government under National Finance Commission (NFC) transfers while it has targeted Rs317 billion indigenous revenue collection through Punjab Revenue Authority, Board of Revenue, Excise and Taxation and non-taxation revenue. Further, the government is expecting almost Rs132 billion funds from donor-funded projects in the shape of foreign assistance.

The economic impact of the COVID-19 is going to be exposed in the forthcoming fiscal year so the government is fixing downwards revenue targets for the fiscal year 2020-21. The government allocated Rs10 billion for new 8,519 recruitments in the health department, Rs13 billion block allocation for COVID-19 specific on the current side, Rs30 billion economic stimulus package for SME sector and Rs15 billion tax relief package and Rs35 billion for the existing workforce of the health department under COVID-19 initiatives.

Further, the government has allocated more than 55% of its budget for the four departments, including Rs323 billion for school education, Rs130 billion for specialised health, Rs123.5 billion for primary health, Rs132.8 billion for the police department. The overall provincial tax revenue target is being fixed at Rs230 billion from last year Rs295 billion.

The revenue target for the Punjab Revenue Authority is being fixed at Rs125.4 billion, Board of Revenue Rs65 billion, Excise and Taxation Rs32 billion since car sales have been sharply declining for the last fiscal year. Similarly, provincial non-tax revenue is estimated at Rs88 billion from the last year of Rs93.395 billion.

The government has decided to incentivise 10 sectors in the taxes. These sectors are the property builders and developers, commission agents of agricultural produce, audit, accounting and tax consultancy, photography services, skin and laser clinics, manpower and recruitment services, parking services, IT services, education franchise, restaurants, beauty salons in case of payment via debit/credit cards. 

Further, these sectors are given tax exemption due to COVID-19, medical consultancy, beds, room charges of hospitals, health insurance, hotel and guest houses with less than 20 rooms, marriage halls, lawns, pandals and caterers, digital platform services, tour operators, healthcare, gym, physical fitness etc, and property dealers and realtors.

Similarly, discounted 5% GST on service is proposed for the sectors, rent-a-car (provided to individuals), automobile dealers other than corporate and authorised dealers, cable TV operators, toll manufacturing, apartment management and rent collection.

The current expenditure is increased to Rs1.336 trillion from Rs1.298 trillion, with an increase in salary expenditures to Rs355.5 billion from Rs37.6 billion, pension Rs250.7 billion, PFC Rs448.5 billion, service delivery expenditures Rs239.7 billion, current capital expenditures Rs129.39 billion and Account-II (food account used for wheat trade) estimated at Rs331 billion.

The province is allocated Rs41.8 billion for interest payments against the loans which are more than Rs10 billion from the last fiscal year.

The province will witness an extra burden of Rs35.9 billion due to increase in salary budget of police of Rs9.2 billion following the new recruitment, Rs4.4 billion for the new posts created in health and food departments, Rs9.5 billion for corona incentive allowance, Rs1.5 billion for judges package, Rs2 billion for doctors' package and Rs8 billion due to annual increments.

The government also decided to continue Sehat Sahulat Card with estimated funds of Rs12.5 billion, creating an environment endowment fund of Rs8 billion, allocating Rs5 billion as block allocation for Covid-19.

Further, the government is targeting an expense of Rs38.1 billion for the procurement of drugs and medicines which is showing an increase of 57% from the previous year of Rs24.2 billion. Similarly, a major spike is witnessed in the operating expenditures of the health department budget estimates. The increase of 136% is forecasted in primary and secondary healthcare with Rs11.8 billion allocation and 29% in Specialised Healthcare and Medical Education with an allocation of Rs37.5 billion.

However, the policy-makers are unable to get rid of non-implementable Public-Private Partnership (PPP) projects and aiming unrealistic Rs100 billion projects for the fiscal year 2020-21 whereas not a single PPP project of Rs42 billion was materialised during the ongoing fiscal year 2019-20.

On the development side, other than Rs100 billion PPP projects, the government has fiscal space for Rs337 billion of ADP, out of which Rs130 billion will be allocated for ongoing development schemes, Rs40 billion for other development projects, Rs9 billion of Punjab government component for foreign assistance projects, Rs10 billion for priority projects, Rs5 billion each for South Punjab Block and Chief Minister Special Package.

Originally published in The News