Block allocations, revised estimates may again mar budgetary commitments

LAHORE: The Centre for Peace and Development Initiatives (CPDI) on Sunday criticised the PML-N-led Punjab government for not involving the civil society in budget making, failing to achieve targets set for different sectors in the ongoing fiscal year and leaving loopholes in the revenue and expenditure break-up for FY 2016.

“The government has presented Rs1.4 trillion budget for the fiscal 2015-16 but it remains to be seen that how receipts and expenditure targets will be achieved in the next financial year”, said Amer Ejaz, the CPDI executive director at a press conference at the Lahore Press Club.

Mr Ejaz said the government could spend only Rs170 billion out of total Rs345 billion annual development budget for 2014-15.

He said the stark difference between the budget estimates and revised estimates for ongoing year showed a lack of planning by financial managers, raising serious questions on the whole budgetary process.

He said the provincial government had been using block and “other” allocations to cut allocations for important sectors, claiming Rs66 billion had been kept under block allocations for next fiscal.
CPDI deplores ‘ignoring’ civil society in budget making

“It has become traditional in Pakistan to present budget in the second week of June and after a one-week debate in the assembly it passes through all the stages. The yearlong process of budget making is done in absolute secrecy without consulting civil society at any stage. Even the reaction time given after the release of budget is not sufficient for the civil society and legislators to make any meaningful contribution. This is quite in contrast to international best practices where budget proposals are discussed for several weeks”, he said.

Mr Ejaz said despite commitments from the Punjab government, social sector remained one of the neglected areas in 2014-15. As per revised figures of the development capital budget of last year, Rs300 million were allocated for Human Rights and Minorities affairs but not a single penny could be released for the purpose, he deplored.

Similarly, he said, Rs11 billion allocation for health was reduced to half in the revised estimates; higher education received a cut of more that Rs2 billion; Rs50 million were allocated for literacy but nothing could be released; the budget estimates for school education were Rs398 million but revised estimates showed only Rs245 million; Rs400 million were allocated for special education but revised estimates remained zero; and only Rs3 million out of Rs163 million allocated for Information Technology could be released.

He said the other side of the development budget- development revenue budget- also portrayed a similar picture as Rs7.5 billion were allocated for agriculture research during fiscal 2014-15 but revised estimates were Rs1.3 million. For energy, which was claimed to be a priority area, Rs18 billion were earmarked but revised estimates showed that it would only get Rs8.8 billion.

“Of Rs7.7 billion allocated for health, the final figures will not be more than Rs5 billion. Rs2.2 billion were allocated for literacy, but final allocation will be around Rs217 million only. This last year scenario shows that next year figures will be just a paper commitment and government will again fail to release the money committed in the budget,” he lamented.

CPDI Program Manager Syed Kausar Abbas said though the the government talked vehemently about tax reforms and improving the rusty tax collection machinery, the estimates of receipts didn’t support its claims. In this connection he cited total collection of agriculture income tax in 2013-14 which was just Rs990 million. For 2014-15, the estimated collection of agricultural income tax was Rs2 billion but not more than Rs1 billion would be collected at the end of the year, he said.

“The (agricultural income) tax is again budgeted Rs2.3 billion for 2015-16 which again left a big question unanswered that how this extra one billion would be collected. With more than 3.8 million farming families and Rs12.5 million hectares of cultivated areas in Punjab, the collection targets and procedures need massive revisions,” Mr Abbas said.

“Another such area was professional tax levied on professions. With more than 200,000 registered doctors and lawyers in the province, the estimated receipts are only Rs770 million. This target is more or less same as it was in the current year. This means that no extraordinary attempts will be made to broaden the tax net. Similarly, the target for sales tax on services for 2014-15 was estimated at Rs93 billion but not more than Rs46 billion will be collected,” he added.

He said the budget document failed to explain as to how Rs73 billion for the next year would be collected.

The district profile of the development budget also presented a dismal picture, he said. “It shows that money will continue to siphon off to Lahore, Rawalpindi, Gujrat and Faisalabad with many of the underdeveloped districts remaining ignored”, Mr Abbas added.

Replying to a question about agriculture income tax, Mr Ejaz said CPDI experts were not in favour of taxing small farmers who were already burdened by the rising in-put costs and energy crisis. He said but the farmers earning Rs500,000 and above profits must be taxed like professionals paying income tax.

To another question, he said the provincial economy was not documented, urging the government to plug loopholes and increase revenue receipts instead of relying on the share from federal divisible tax pool.

Published in Dawn, June 15th, 2015

Dawn News

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