QUETTA: Balochistan is a vast province, almost half of Pakistan in terms of territory, with limited resources to build its huge infrastructure. The National Finance Commission Award is based on distribution of resources on a population basis and it has merely 5.11 per cent of the country’s population. Its revenue base is narrow at around five per cent of revenue expenditure in a fiscal year.
The narrow tax base is because the central government retains all powers to levy taxes. Under the law, provinces are barred from imposing a significant tax generating sizable revenue for the provincial exchequer. The federal government is collecting all taxes which are later on transferred to the provinces. The share of the federal revenue is around 95 per cent, mostly transfers from the central government or share from the divisible pool of central resources. In case of transfer of resources, all deductions are made at source.
Interestingly, there were outstanding dues of the Balochistan government on Wapda for supplying natural gas to its power-houses, the central government refused to deduct the outstanding dues of Balochistan at source from the revenue transfer of Wapda. But in case of electricity bills, debt-servicing or other deductions are made at source in case of transfer of resources to the Balochistan government.
In case of provincial taxes, the provincial government revenue is based on property tax and motor vehicle tax. Income tax on agriculture is negligible and the government is collecting more tax on advertisements published in newspapers in Balochistan than the income tax of feudal lords and huge landowners dominating the politics of Balochistan or the country.
The provincial government is handicapped in terms of developing a tax culture or creating reliable tax collecting machinery and is heavily depending on the central government to collect all the taxes, deduct collection charges that are exorbitant by all standards, and transfer it to the provincial government.
There is no plan to tap the revenue for the provincial government by mobilising resources and motivating the people to pay taxes for meeting the expenditure of the government or accelerating the pace of economic development by improving services, quality of life, quality of available manpower and building the basic infrastructure for development.
The federal list of taxes include: tax on income; capital value tax; customs duty; sales tax; GST (central excise mode); federal excise duty and royalty; federal GST (2.5 per cent) and workers welfare tax.
The provincial taxes are: urban immovable property tax; transfer of property tax (registration fee); land revenue; tax on professional trades and callings; provincial excise; stamp duty.
The biggest collection is from the provincial excise and the government is collecting over Rs248 million per annum at the moment. The Islamic alliance in the provincial coalition is mounting pressure on the government to do away with this revenue— Rs248 million a year— in place like Balochistan. Recently, the motor vehicle tax has surpassed the provincial excise and now the yearly collection is around Rs.264 million.
These taxes are followed by stamp duty around Rs160 million, land revenue Rs.58 million and urban immovable property Rs45 million.
Off and on, government leaders from Balochistan are making visits to Islamabad seeking more resources and more funds to meet the revenue expenditure of the administration and also to finance the modest public sector development programme.
They had meetings with the president, prime minister and others seeking their intervention in getting more resources. The prime minister once told the chief minister to widen the tax base and if Balochistan add Rs1 billion to its provincial revenue, the central government would provide Rs2 billion in addition.
It was the challenge for the provincial government to boost its revenues. According to informed sources the provincial government has proposed to restructure the taxation base and widen it substantially. The revenue of the province is expected to double during the next fiscal year from Rs1.2 billion to Rs2.5 billion, official sources said.
“We are making efforts to increase the provincial revenue,” a senior official of the finance department said and added that the department had succeeded to some extent in enhancing the resources by adopting various measures and had recovered Rs570 million from the federal government.
The provincial government spent this amount on early construction of the Bolan Medical Collage Complex, which was a federal government project, but Islamabad did not return back this money. “In routine checking we detected this wrong payment and took up the issue with Islamabad for recovery of this huge amount,” he told Dawn.
Independent economists here believe that a billion or two will not help solve the problem of pre-dated backwardness of Balochistan.
Balochistan has a huge landmass and a small population and it is doubly disadvantaged to retain pre-dated poverty, hunger, backwardness and illiteracy, Professor Siddiq Ahmed Khan, an independent economist, stated.
The president of Balochistan Chamber of Commerce and Industry (BCCI), Sadiqullah Khan Kakar, was also in favour of increasing provincial taxes. He was of the view that without boosting industry in the province the revenue could not be increased.
“In my opinion, industry can stable the economy of the province and it would help in widening the tax base,” Mr Kakar said. He said that Punjab was generating a lot of revenue by establishing small and big industry. “Punjab’s revenue is around Rs50 billion,” he said.
Another independent economist and president of Balochistan Economic Forum Sardar Shaukat Aziz Popalzai said that the tax base could be increased by exploiting natural resources. As Balochistan is rich in natural resources and government should provide incentives and facilities to the people for utilizing these resources to generate revenue.
Sardar Popalzai said that abolishing taxes would make Balochistan more dependent on Islamabad. “Tax holiday given in Balochistan did not help to develop industry. The investors abandoned their units in Hub and other areas after 10 years’ tax holiday,” he said and added that the government should increase local tax on mineral.
However, Balochistan Traders Organisation president Mohammad Rahim Kakar holds a different opinion regarding provincial taxes. He said the government should not impose new taxes on poor people who are already facing price-hike and increase in utility bills. He said that government should promote tax culture by brining big landlords and others into the tax net.