Punjab budget

Published June 15, 2024

PUNJAB’S budget for 2024-25 provides much fodder to those who believe that the increased provincial share from the tax pool resource under the NFC arrangement has stripped the federating units of their drive to boost their own tax revenues. The Rs5.4tr budget announced by the Maryam Nawaz government on Thursday plans to collect nearly Rs472bn — up by nearly 19pc from original estimates of Rs393.5bn for the outgoing year — in direct and indirect taxes during the next fiscal. That Punjab’s tax target is less than 0.4pc of the size of the economy reveals its lack of motivation to raise its own tax revenues, as Pakistan’s largest province is flush with cash owing to a whopping increase of 36pc in its share from the federal divisible pool. With the country struggling to lift its abysmally low tax-to-GDP ratio of below 10pc to 13pc in the next three years, Punjab, which accounts for more than half the economy, is expected to do better than that.

Therefore, it is disappointing to see the new budget leave tax rates on income from agriculture unchanged and far below the normal rates. It is important to bring agriculture tax rates on a par with normal personal income tax rates to plug this loophole for tax evaders. Likewise, the province has also stopped short of effectively taxing immovable property despite several studies that the latter could be a major source of revenue. But who would want to make unpopular decisions when the rulers have more than enough cash in their coffers to finance large infrastructure schemes, or hand out free laptops to the youth, distribute interest-free loans among farmers, give free solar panels and subsidise their supporters’ housing loans? Our provincial tax collection is less than 1pc of the country’s GDP, compared to 5-6pc in India. Increasing the tax-to-GDP ratio is not possible without effective provincial contribution. Being the largest province, Punjab should have taken the lead.

Published in Dawn, June 15th, 2024

Opinion

Editorial

Population calamity
Updated 22 Jul, 2024

Population calamity

Pakistan can also control its growth rate by following the examples of its peers and implementing functional family planning programmes and campaigns.
Blow to occupation
22 Jul, 2024

Blow to occupation

THE International Court of Justice has delivered a legal blow to the decades-old Israeli occupation of Palestinian...
Seeking Priya Kumari
22 Jul, 2024

Seeking Priya Kumari

PRIYA Kumari — the minor girl who vanished on Ashura in 2021 while serving water at a sabeel in Sukkur district ...
Olympics contingent
21 Jul, 2024

Olympics contingent

FROM 10 in Tokyo the last time, it is now down to seven in Paris, and split across just three disciplines. When...
Grave concerns
21 Jul, 2024

Grave concerns

PUNJAB Chief Minister Maryam Nawaz’s open assault on the Supreme Court for ruling in favour of the PTI in the...
Civil unrest
Updated 21 Jul, 2024

Civil unrest

The government must start putting out fires instead of fanning more flames.