KARACHI, June 19: Sindh Finance Minister Abdul Hafeez Sheikh is presenting on Thursday afternoon the provincial budget with an expected outlay of Rs85 billion plus in which the availability of resources and their subsequent distribution among 16 districts is likely to remain a doubtful and confusing issue all through 2002-03 financial year.
With no announcement of the National Finance Commission (NFC) award — a breach of constitutional obligation — Sindh will get its share on the basis of 1997 NFC award in which population census of 1981 is the criteria for resources allocation.
Indications are that the current revenue expenditure budget for 2002-03 would be in the vicinity of Rs75 billion. This would include Rs9 billion additional expenditure resulting from the increase in salary of the government employees announced last December and some benefits given to lower grade employees in the current federal budget announced on June 15.
According to the interim award of the Provincial Finance Commission (PFC) of Sindh, the provincial administration is likely to retain Rs45 billion (60 per cent) and pass on the remaining Rs30 billion (40 per cent) to the 16 district governments of the province.
In line with the federal government approach, the Sindh government is expected to maintain the size of provincial development programme to about Rs9 to Rs10 billion. The provincial administration is expected to retain the mega development scheme and all those schemes which are spread over in more than one district.
The federal budget in brief for 2002-03 indicates total federal transfers of Rs56.45 billion to Sindh as against actual receipt of Rs50.66 billion in the current outgoing fiscal year. This obviously includes the Sindh’s share in the federal divisible pool of taxes and also straight transfers from oil and gas surcharge and excise duty.
Hafeez Sheikh in his budget speech is expected to announce his government’s determination of terminating transfer of property through power of attorney and would offer incentives and concessions for registration of the property in the holders’ name. Since this issue involves a lot of legal hassles, the minister is likely to announce the formation of some committee to look into this issue, and in the meantime offer incentives to holders of power of attorney to register the property in their name.
Sindh government is expected to take up the issue of introducing ‘road usage tax’ with Islamabad this year to replace it with the Motor Vehicle Tax. Islamabad had turned down the Sindh government’s request for introduction of road usage tax last year on the plea that petrol and fuel is the 51st entry on first part of the federal government’s subjects list. Under this scheme, the road usage tax would be collected by the three oil distribution companies through petrol pumps on nominal service charge.
Car and motorcycle owners will pay this tax at the rate of Re0.50 per litre when they will go to pump stations to get their vehicles tanks filled with petrol or fuel. The motor vehicle tax offers a cumbersome procedure for payment.
In case the Sindh government manages to get this scheme approved, the car owners will be spared of hassles of MVT payment and Sindh’s collection is expected to go up by more than Rs1 billion.
Overall, the Sindh government is expected to generate more than Rs13.5 billion revenue next fiscal year without levying any new tax or raising rate of the existing levies.
The World Bank is expected to offer $100m (Rs6bn) interest free grant. What remains unresolved is the distribution of 2.5 GST share collection of Rs32bn. In the outgoing current fiscal, the Sindh local government department worked out a total of Rs6.6bn octroi and zila tax distribution to all the 16 districts. Next fiscal year this may go up to Rs7.2bn.
Total resources availability in the next fiscal year is expected at about Rs82 billion. The Sindh government may announce a deficit budget with an aim at cutting down on expenditure to generate saving for investment in development schemes.