VAT likely to be put on the backburner

Express May 10, 2010

LAHORE: Punjab government is likely to not impose value-added tax (VAT) in the upcoming financial year’s budget.

It is also pondering upon increasing the Annual Development Plan (ADP) funds by Rs25 billion. Finance department officials told The Express Tribune that the government was planning not to introduce any new taxes in the upcoming budget.

However, they claimed that in order to boost revenue the government might increase the prices of vehicles as well as restaurant, property and toll taxes. The officials said that a 15 per cent raise was expected in the salaries and pensions of government employees.

Punjab chief minister’s fixation with the sasti roti scheme might have faded out with the current year as according to one of the officials, “The government has lost interest in the sasti roti scheme and is planning to do away with it in phases.” He said that ending it in one go would be damaging for PMLN’s political standing. Punjab government allocated Rs28 billion in total for sasti roti and sasta aata schemes in last year’s budget, out of which Rs7 billion had been appropriated for sasti roti.

“The government is planning to cut the sasti roti budget to Rs3 to Rs4 billion,” one of the officials said. The government is also likely to increase the budget cuts for the agriculture and power sector. Punjab CM’s personal favourite, Danish School System, is likely to get Rs5 billion in the next budget. On the VAT, the officials said that the government did not have the human and physical resources required to impose the tax.

Punjab Finance Minister Tanveer Ashraf Kaira also took a cautious stand when asked about the imposition of VAT, he said, “We would collect VAT but first the federal government has to finalise it.” The layout of the budget would be around Rs500 billion, according to the finance officials. But they added that the figure was conditional and the final amount would be decided after a meeting with PML-N chief Nawaz Sharif (scheduled today).

Kaira maintained that nothing has so far been decided with regards to the budget layout. The provincial finance minister also said that the government was not worried about the extra Rs70 billion that the province would receive from the federal government, under the updated National Finance Commission (NFC) award. “There is no need to worry about the NFC award.

Last year, the Federal Board of Revenue (FBR) did not achieve the tax target but it gave Punjab the promised amount,” Kaira said. The amount due under the NFC is linked to the federal government’s ability to achieve its tax target.


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