Post-budget briefing: Sindh wants Centre to withdraw taxes, give more from divisible pool

CM’s adviser fears government will miss its targets in the current budget.

KARACHI:

The Sindh government has demanded the federal government withdraw taxes on the development of gas infrastructure and transfer of sales tax, and give it more money from the divisible pool.

During the post-budget briefing at CM House on Saturday, adviser to chief minister Murad Ali Shah said the funds from the divisible pool must be released every day, rather than quarterly or monthly. "The federal government is blatantly violating Articles 161 and 172 of the Constitution by taxing natural resources," he pointed out. "We urge the Centre to refrain from acting unilaterally in the matter and start consultation with the provinces."

Shah added that the federal budget estimated that it will collect Rs145 billion from the gas infrastructure development cess, which is distributed among the provinces later. The provinces have, however, not received a single penny in the last three years.

"We are suffering from a financial crunch and could not meet our development targets because we were unable to get our share from the federal government in the outgoing budget," he said. "Despite sending 11 reminders, the officials of the federal government kept mum over this issue." From the divisible pool, the provinces have not received the entire amount. "The last instalment came in March and it [Centre] still owes us around Rs61 billion."

Last year, the provincial development portfolio included Rs185 billion, out of which Sindh utilised Rs115 billion on various schemes, said the finance adviser. "Many schemes that could not be initiated have been incorporated in this budget," he added.

Shah also promised reforms in agriculture and other taxes. The provincial government has finalised the draft on agriculture tax reforms and will pass the law in the next assembly session, he said. "The provincial government has been collecting sales tax on services and will stand up for the transfer of the collection from sales tax on goods as well," he added.

Out of the total budget outlay of Rs686 billion, around 80% funds will come from the federal government, he added. "We will try to achieve our targets but, once again, we are dependent on federal government."

Higher education

The finance adviser lauded his provincial government for allocating Rs5 billion to universities. The grant will be issued through the Sindh Higher Education Commission established through legislation in the Sindh Assembly.

'Bureaucrats misguide PM'

Responding to a question on allocation in the energy sector, the finance adviser said Prime Minister Nawaz Sharif was eager to put more money in energy projects in Sindh but some bureaucrats in the federal government misguided him. "Despite the hue and cry, the federal government has only announced a block allocation of Rs8 billion for Karachi-related mega projects," he complained. "We will raise this issue again to enhance the budget, especially for the Karachi Circular Railway, the Lyari Expressway, the K-4 and S-III projects."

Bus Rapid Transit project

Shah said the provincial government will soon announce a bid for the Yellow Line of the Bus Rapid Transit Project. The procurement period will take six month while work on this project will be finished in two years, he added. "Overall, we have allocated Rs3 billion for the mass transit project that includes the Yellow, Green and Red lines." According to the finance adviser, Sindh will get an extra Rs3.2 billion from new taxes and will try to utilise all of the Rs168-billion annual development funds on various schemes next year.

Focus on service delivery

According to chief minister’s finance adviser Murad Ali Shah, the provincial government will now focus on service delivery in every department. “We want to improve our infrastructure and repair the buildings of schools and hospitals, and maintain the roads,” he said.

The adviser confessed that many schools have no boundary walls and their roofs are on the verge of collapsing. The same situation exists in the health sector. “We have now enhanced the budget for schools maintenance and repairs from Rs400 million to Rs4 billion and have devised a mechanism to properly utilise the funds,” he assured. “You will see the difference in a year.” Shah explained the education department self-monitors the utilisation of funds, and the headmaster of the school will be responsible if they are not utilised.

In the health sector, the adviser said the funds have been enhanced from Rs5.3 billion to Rs9 billion to improve service delivery, provide equipments, X-ray machines, CT scans and enhance the medicine budget of all public hospitals. “The medicines budget will increase by around 35% in all hospitals,” he said, adding that the maintenance budget has been increased by 600% while the budget for generator has been increased by 70%.

The government also wants to clear its electricity bills and has increased the allocation to Rs26 billion. “The federal government had claimed Rs33 billion as outstanding electric dues but we reconciled it to Rs6.4 billion because they had issued inflated bills,” said Shah. “Hesco and other power utility companies have issued millions of rupees bill for a police check post and a two-room school. This is completely unfair.”

Published in The Express Tribune, June 15^th, 2014.