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Same old document: Sindh budget

June 20, 2013

SINDH’S budget for the next financial year doesn’t betray signs of a party that has just lost the elections in the rest of the country and is willing to change. Nor does it signal a determination that the ruling PPP is gearing up to fight back on the strength of a better performance in the province. The party’s next provincial budget showing an outlay of Rs617bn is another routine document containing millions of numbers that hide more than they reveal. It lacks bold initiatives that were necessary to boost the provincial revenues to reduce the province’s dependence on federal transfers for development and other expenses especially devolution. Although the budget commits to expanding the base of provincial sales tax on services to boost its collection next year, the initiative has been taken half-heartedly. Some services have been left out and others will be charged at a much lower rate than the standard 16pc. Agriculture income tax reforms have again been put off. Few other initiatives like a hike in property tax to raise provincial tax revenues have also been proposed, but the objective of increasing it significantly will be a major challenge for the government. Punjab has shown a stronger will to raise its tax revenues than Sindh.

The province’s development spending target of Rs185bn also seems to be ambitious given the fact that it could spend slightly more than half the targeted amount of Rs181bn this year owing to the massive shortfall in federal transfers and low provincial revenues. Besides, improvement in provincial taxes and optimal utilisation of development funds will largely hinge on peace in urban Sindh, particularly Karachi. This is what Chief Minister Qaim Ali Shah needs to focus on. The province’s financial matters should be left to a full-time minister.