The Sindh government was supposed to ensure payment of salaries to 50,000 employees of its devolved departments in addition to transfer of funds for their non-salary expenses, the sources said. While this amount came to Rs17billion during the financial year 2010-11, the Sindh government transferred only Rs16 billion to the CDGK, they added. – File Photo

KARACHI, July 3: The City District Government Karachi with reported liabilities of Rs6 billion towards its contractors is finding it difficult to pay salaries to its 80,000 employees, it emerged on Sunday.

Sources said that the CDGK was facing a shortfall of around Rs390 million a month due to a huge gap between the payments made by the Sindh government in the last financial year under the heads of the Octroi Zila Tax (OZT) and funds for the salary and non-salary components of devolved departments and Annual Development Programme.

The sources said that an inordinate delay in convening the meeting of the provincial finance commission was another cause of the CDGK financial crisis. They added that the commission was supposed to update a formula for determining the rate of increase in the OZT last year.

They said the city government's share under the OZT introduced by the federal government in lieu of Octroi tax after its abolition in 1999 stood at Rs7.2 billion in the financial year 2010-11. But, the Sindh government released only Rs3.9 billion to the CDGK, they said, adding that the remaining over Rs3 billion had not been provided so far.

The Sindh government was supposed to ensure payment of salaries to 50,000 employees of its devolved departments in addition to transfer of funds for their non-salary expenses, the sources said. While this amount came to Rs17billion during the financial year 2010-11, the Sindh government transferred only Rs16 billion to the CDGK, they added.

Of the over 80,000 employees, around 50,000 belonged to the departments that were devolved from the provincial government to the city government under the Sindh Local Government Ordinance-2001.

The sources said that funds for the salary and non-salary components of the devolved department's employees were transferred to the city government through a mechanism called single-line transfer system.

Besides, they said, there were 27,000 employees from the defunct Karachi Metropolitan Corporation and another 4,000 from the defunct Karachi Development Authority serving the City District Government Karachi at present.

Prior to the abolition of octroi tax in 1999 by the then government of Nawaz Sharif, annual contracts for the collection of octroi used to be awarded after an annual increase of 10 to 15 per cent in the contract amount, the sources said. The city government remained deprived of such increase in the Octroi Zila Tax (OZT), introduced in lieu of octroi, till 2007 when the provincial finance commission increased it slightly, they said.

The sources explained that a formula for a further increase in the OZT was evolved at a meeting of the PFC held in 2007. It was scheduled to be revised after three years at the PFC next meeting in 2010 but it was postponed on the plea that its three members — a city nazim, a town nazim and a union council nazim — did not exist following their completion of tenure in 2009.

Some insiders argued that the government could still hold the commission's meeting as the bureaucrats who were currently working as administrators in the city district governments and town municipal administrations in place of city nazims and town nazims enjoyed more powers than those the nazims previously had.