• Budget counts on higher federal transfers
• Optimistic revenue collection under all heads
• Targets for current fiscal year look to be missed across the board
KARACHI: The Sindh budget for 2018-19 was presented with higher receipts and expenditures, but a lower deficit from the outgoing fiscal year, while the chief minister boasted of “no new taxes.”
Revenues are expected to increase by 13 per cent, even though the budget contains no new tax measures. The additional Rs107bn is largely coming from an expected increase in federal transfers and sales tax collected by the provincial revenue authorities, as well as a slew of miscellaneous “other taxes”, such as on electricity, property and stamp duty. Revenue from agricultural income remains negligible at Rs1bn.
The budget estimates for FY19 show the government expects a revenue base of Rs923.184bn, which include Rs223.267bn provincial receipts and the rest is federal transfers. Meanwhile, its expenditures will be around Rs1,117.149bn, suggesting a wide fiscal deficit of Rs174.9bn.
The deficit has been further reduced through financing of Rs150bn which includes Rs95.4bn as net capital receipts and expenditures and Rs55bn as carryover cash balance.
This Rs150bn inflow reduced the fiscal deficit or closing balance of the provincial government as Rs24.583bn. The estimated deficit for FY18 was Rs43.6bn against the budgeted deficit of Rs18.369bn.
The government expects to receive Rs680.1bn as federal transfers for next budget of FY19 while its’ estimated receipts for FY18 are about Rs619bn; significantly higher than it received last year. The province had kept Rs654bn as federal transfers for the last fiscal year.
The province expects to generate 23.4bn higher revenue for FY19. The government expects to receive provincial revenue worth Rs243bn against revised estimate of revenue of Rs196.9bn for the current fiscal ending on June 30.
The government expects to receive Rs110bn sales tax for FY19 while estimated receipt for FY18 is Rs92bn indicating that the expectation is much higher for sales tax in the next fiscal. The government could not collect budgeted sales tax of Rs100bn.
The government has planned for expenditure of Rs1,117.149bn for FY19 against the revised estimate of Rs965.9bn for FY18. The budgeted expenditure for FY18 was Rs1010.5bn indicating that the government opted for a significant increase in the total expenditure.
The government succeeded to generate indirect taxes as per the budgeted estimates with slight difference. The government’s revised estimate for indirect taxes for FY18 is Rs70.9bn against the budget target of Rs72.7bn. However, the government expects to generate Rs86.7bn indirect taxes for FY19.
Related: Stagnant development spending
Under the head of indirect taxes the government expects to receive Rs4.7bn through electricity in FY19 which is 113 per cent higher than revised estimate of Rs2.2bn for FY18. The government will collect Rs12bn through stamp duty against the revised estimate of Rs9.5bn for FY18. The motor vehicle tax will yield Rs8bn in FY19 against the revised estimate of Rs6.95bn for FY18.
The government collected just Rs1bn through tax on agriculture income in FY18 while it expects to earn Rs2bn in FY19. The government succeeded to reach the target of Rs1bn for FY18.
However, the government is expected to receive Rs7.68bn through property tax in FY19 against the revised estimated of Rs4.2bn for FY18. The target for property tax in FY18 was Rs6.3bn which could not be achieved.
Published in Dawn, May 11th, 2018