Punjab likely to present Rs2.2 trillion budget

ADP to hover around Rs350b mark; more services to come under tax net

LAHORE: The Punjab government will present its annual budget, estimated to have a total outlay of Rs2.2 trillion, for FY2019-20 on Friday (today). The total Annual Development Programmee (ADP) is likely to hover around the Rs350 billion mark.

The provincial government has decided to expand the scope of provincial sales tax on services and increase collection targets on the same to more than Rs165 billion. Authorities have decided to introduce educational franchises, doctors and medical consultants, with fees of Rs1,500 or more, to the tax net.  Also, tailoring, fashion designer services, construction machinery rental will come under the tax regime.

Besides the inclusion of new services into the tax net, the government will also rationalise levies for some service sectors to increase their competitiveness. It has also planned to rationalise several excise taxes, including increase in motor registration fee. The proposal outlines increasing lifetime token tax on motorcycles /scooters from Rs1,200 to Rs1,500.

It will also levy registration fee of motorcycles in fixed mode. Bikes up to 70cc will be charged Rs750, those up to 200cc will have a fee of Rs1,500 and motorcycles above 200cc will have to pay 2% of the invoice value.

In addition, it has been proposed to increase lifetime token tax on motor cars up to 1,000cc from Rs10,000 to Rs15,000 and rationalisation of tax on imported vehicles exceeding 1,300cc Documents show that a revision in tax rates of immoveable properties has also been proposed. There will be remission on property tax over and above liability, 80% remission on rented property, enhancement of stamp duty rates in case of adhesive stamps (judicial, revenue, insurance, etc) as the rates of stamp duty paid in shape of adhesive stamps under the Court Fee Act, 1870 and Stamp Act, 1899 have not been revised since 1973 and 1995 /1996, respectively.

The paperwork indicates that the government will receive the highest ever share from the federal divisible pool as the Centre has fixed Rs5.5 trillion revenue as a collection target, hence increasing the provinces’ shares. However, these budgetary estimates could be adversely affected with low tax collection by the Federal Board of Revenue (FBR) and provincial revenue collection departments as witnessed in the current fiscal year of 2018-19.

The proposed ADP is Rs350 billion has a breakdown of Rs144.6 billion for the social sector, Rs90 billion for infrastructure, Rs35.7 billion for the production sector, Rs11.5 billion for the services sector, Rs20 billion for special initiatives and Rs15 billion for other projects.

The proposed ADB outlay highlights that the government is allocating Rs52.5 billion for the education sector, out of which Rs39 billion are for school education, Rs9 billion for higher education, Rs2 billion for special education, Rs2.5 billion for literacy and non-formal education and Rs3.6 billion for sports and youth affairs.

The proposed development budget for the health sector is Rs50 billion, out of which Rs22 billion will be spent on specialised healthcare and medical education, Rs23 billion on primary and secondary health care and Rs5 billion on population welfare. The government has allocated around 40% of the health sector development budget for South Punjab and 21% for North Punjab. Besides, necessary resources will be allocated for central Punjab and rest of the province.

In the next fiscal year, the government has decided to distribute health cards in all 36 districts of the province. It has also proposed Rs30 billion allocation for water supply and sanitation development projects, Rs1.5 billion for social welfare, Rs1 billion for women development and Rs60 billion for local government and community development.

For infrastructure development, Rs90 billion is being allocated of which Rs35 billion is for roads, Rs26 billion for irrigation, Rs7.5 billion for energy, Rs8 billion for public buildings and Rs7 billion for urban development.

The total proposed development plan for the production sector is Rs35.7 billion, out of which Rs12.7 billion is for agriculture, Rs3 billion for forestry, Rs500 million each for fisheries, wildlife, and food, Rs5 billion for livestock and dairy development, Rs11 billion for industries commerce, investments and skill development, Rs500 million for mines and minerals and Rs2 billion for tourism development.

Published in The Express Tribune, June 14^th, 2019.