ISLAMABAD, Dec 28: The Balochistan Resource Management Programme completed recently at a cost of $130 million could not achieve its targets of improving administration, eliminating unnecessary subsidies and introducing tax reforms.

An evaluation report of the Asian Development Bank which funded the programme said it was “partially successful” and that its design was rated as only partly relevant since it was overly ambitious and complex given the capacity of the provincial government.

“The programme could have been implemented more successfully had its design been simpler and more focussed,” the report said.

The programme focussed on seven policy reform areas: (i) rationalise poorly-designed, untargeted subsidies; (ii) broaden the tax base, expand coverage and rationalise user charges; (iii) establish reliable, transparent, and accountable financial management systems; (iv) establish and implement transparent, rule-based systems of local government funding; (v) improve administrative frameworks for effective public service delivery; (vi) create an enabling environment for private sector development and promote public-private partnerships in service delivery; and (vii) improve management and sustainability of water resources.

“Coordination was weak and hampered by inter-departmental friction. Supervision for the project was not adequately provided as the high-level steering committee was untenable and central leadership in the bureaucracy played only a passive advisory role. The provincial government’s commitments, which were secured during the design of the project, were not sustained during its implementation. Political risks were not adequately mitigated and the project was unable to build the necessary political constituency. As a result, compliance with policy conditions was poor and policy reversals occurred.”

The ADB report said the programme included a broad range of measures to increase provincial taxes and non-tax revenues. There was a significant increase in provincial own-source revenues during its implementation period from Rs1.5 billion in 2005-06 to Rs2.9 billion in 2006-07.

Much of the increase was, however, not attributable to revenue reforms under the programme, with the possible exception of increases in the motor vehicle tax (from Rs191 million in 2005-06 to Rs253 million in 2006-07) and mineral royalties (from Rs3 million in 2004 to Rs353 million in 2007).

The proceeds from the sale of land by the provincial government comprised the bulk of revenue gains. The conditions for the release of second tranche for the policy reform area were not fully complied with. Revenue yields of existing taxes, such as property tax, motor vehicle tax, stamp duty, general sales tax on services and professional tax were to be enhanced with a combination of rate adjustments, the lowering of exemptions, and administrative reforms, e.g., third-party survey of property tax registers in Quetta, and development of stamp duty valuation and annual rental value tables.

The valuation table for stamp duties on property transfers was not developed, while annual rental value tables for property taxes were not completed until after project implementation.

The third-party survey of the property tax registers was not conducted. Reforms of the general sales tax on services and professional tax were not undertaken. The agreed actions were replaced by measures to revise the taxes related to minor minerals and user charges related to fees for services in tertiary hospitals.

A policy was also to be developed to rationalise the tax on agricultural income, but its implementation was suspended due to frequent drought conditions. Even the implementation of motor vehicle tax reform had to deviate from the original agreed action.The proposed non-tax measures included increasing the tariff for Abiana (water charges) and the implementation of an action for its cost recovery, and auctioning rights to collect royalties on minor minerals.

Among non-tax measures, the ADB says, the auctioning of mineral royalty collections helped increase receipts. The Balochistan government was able to raise Abiana tariffs, but the action plan for cost recovery was neither prepared nor implemented and collections remained insignificant.