Karachi package in doubt

Karachi continues to play a pivotal role in the economy of Pakistan. And yet, both the federal and provincial governments are unwilling to spend money to address the city’s massive infrastructure problems. People in Karachi say that much of the tax collections for the country come from Karachi. In this they are not wrong.

The Federal Board of Revenue (FBR) collected the highest amount of income tax from Karachi in 2018, according to data released by the government through the sixth tax directory of parliamentarians. This trend continued in 2019 as well and will be confirmed when this data is released.

While the focus of this directory is on which politician paid how much in income tax, it also contains the share of provinces as well as major cities and their markets According to the data collected by the FBR on the basis of income tax returns filed by salaried and non-salaried individuals, companies as well as Association of Persons (AOPs), the government had collected Rs209 billion from Karachi alone.

Even here, due acknowledgement is not being given to Karachi. The total of income tax collected from Karachi is much higher if the amount received from all city districts is added into the main tally. The Karachi Chamber of Commerce and Industry (KCCI) contests the tax collection data related to the city presented by the FBR, raising questions over the discrepancy in statistics.

KCCI president Shahab Ahmed recently said in a statement that the FBR reported Karachi’s income tax collection at Rs209 billion in 2018, while district-wise it was shown that Karachi contributed Rs186.3 billion, including central (Rs9.06 billion), east (Rs34.1 billion), south (Rs114.2 billion), and west (Rs28.9 billion). This clearly indicates a discrepancy of Rs23 billion. There is a consensus amongst Karachi-based businesspersons that its share to the national exchequer is downplayed.

In contrast, the tax collected was Rs204 billion from Islamabad and Rs180 billion from Lahore in the financial year ending June 30, 2018. From the other two provincial capitals — Peshawar and Quetta — it was Rs13.63 billion and Rs10.05 billion, respectively. The share of Rawalpindi, Faisalabad and Multan in the tax collection was Rs35.17 billion, Rs16.26 billion and Rs12.77 billion.

Overall, we see that Sindh’s share in tax collection stood at 44.91%, Punjab’s at 34.99%, Islamabad Capital Territory’s 14.77%, K-P’s 3.54%, Balochistan’s 1.67%, and Gilgit-Baltistan’s 0.12%.

The number of filers in Punjab stands at 59.48%, Sindh 27.34%, Balochistan 1.83%, K-P 6.01%, Capital Territory 5.3% and G-B 0.05%. The taxable income of Rs6 million or above shown through filers stood at just 22,593 in the whole country out of total 2.743 million received returns. This is an abysmally low number.

But if we look at money spent on cities, Karachi ranks much lower. This has caused anger and frustration amongst the people of the city. Possibly that is why after the recent rains in which most civic amenities collapsed, Prime Minister Imran Khan announced the ambitious Rs1.1 trillion Karachi Transformation Plan.

In the presence of Sindh Chief Minister Syed Murad Ali Shah, the PM had unveiled the package at Governor House to resolve Karachi’s lingering and chronic issues including provision of clean drinking water, cleaning of drains and sewage and solid waste disposal within three years.

Now there is bickering over who will pay what in the package. Federal Minister Asad Umar says that the Centre will bear 62% of the total amount of Rs1,100 billion while the remaining 38% will be spent by the provincial government.

Sindh government spokesperson Murtaza Wahab says that the major share of the package would be borne by the provincial government. In the Rs1,100 billion package, an amount of Rs750 billion is the responsibility of the Sindh government, he said.

The Karachi package includes Rs92 billion water supply projects, Rs267 billion solid waste management, stormwater drains clearance and resettlement projects, Rs141 billion sewage treatment plan, Rs41 billion road projects and Rs572 billion mass transit, rail and road transport projects.

One can only wonder how a package can work when it is still unclear on who will pay what. Like other packages that the city has seen being announced with equal fanfare in the past, one is fearful that this package will also remain in cold storage. The political fighting between the Centre and the province will mean nothing gets done. Should this happen, we will be back to square one.

 

Published in The Express Tribune, Septe0mber 28^th, 2020.

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