Punjab set to unveil Rs650bn budget

Upcoming provincial budget expected not to feature any new taxes.


Express/mohammad Rizwan June 07, 2011

LAHORE: The Punjab government is set to unveil a Rs 650 billion budget for fiscal year 2011-2012 on June 10, which will reportedly feature no new taxes.

The Punjab Cabinet's budgetary meeting on Tuesday also decided that in the next tax regime, houses of five marlas - which had been exempted from tax laws up till now - will be taxed in the coming year.

Further, new housing societies, clubs and schools will also be included in the tax net for the next budget.

The Punjab government maintains that increasing the excise tax on houses in posh areas of the city will result in greater resources in the new fiscal year budget.

Meanwhile, funds for dairy, livestock and agriculture have been increased in the next fiscal year.

With revenue stream strengthened, it is the development expenditure that has been a problem during the outgoing year for the government. Last year, the government only spent Rs. 100 billion out of Rs. 580 billion on development.

On one hand, the provincial government has been complaining about the non-availability of resources, while on the other it has failed to spend the amount earmarked in the budget for development.

Among the reasons cited are a lack of political will and capacity to spend the money that it has received.

Punjab spent more than Rs. 480 billion rupees on non-development expenditure, but only managed to spend Rs. 100 billion of the Rs. 193 billion set aside for development.

The ADP was first revised to Rs. 150 billion and out of this amount only Rs. 60 billion were spent by the end of April.

However, as in recent years, the last two months leading up to the budget have seen a spending spree jack up the ADP utilisation. This trend of financial mismanagement has been observed since 2008.

Former Punjab finance minister Tanvir Ashraf Kaira said that the situation is not much different in the health and education sectors, which are key development components directly linked to the public.

Out of the Rs. 23 billion earmarked for education, the government had only managed to spend 65 per cent of the reserved amount.

Out of the Rs. 21 billion set aside for health, the government spent only 70 per cent.

The Punjab government's incapacity to spend and its weak political will has been exacerbated by the failure of all its subsidy schemes meant for the public. This includes the Sasti Roti scheme, Food Stamp scheme and Ramazan Bazaars.

Economists now fear that the fate of the Danish Schools and Aashiana Housing Scheme will also hit snags.

Further, new housing societies, clubs and schools will also be included in the tax net for the next budget.

The Punjab government maintains that increasing the excise tax on houses in posh areas of the city will result in greater resources in the new fiscal year budget.

Meanwhile, funds for dairy, livestock and agriculture have been increased in the next fiscal year.

In the cabinet meeting, Mujtaba Shuja-ur-Rehman has been appointed as the new finance minister for Punjab as per a decision taken in a Punjab cabinet meeting. A notification has been issued in this regard.

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