Sindh envisages no new taxes in Rs1.7tr outlay

KARACHI:

The Sindh government presented a Rs1.713 trillion tax-free budget with a deficit of Rs33.848 billion for the year 2022-23 amidst a protest by the opposition parties in the Sindh Assembly on Tuesday.

According to the budget books, the total receipts of the provincial government for next financial year would come to Rs1.679. trillion against expenditures of Rs1.713 trillion which shows a deficit of Rs33.848 billion.

The provincial government has now allocated Rs332.165 billion (excluding assistance for foreign projects) for Annual Development Programme (ADP) as compared to Rs222.5 billion during the outgoing year.

The district ADP size, however, has been kept at Rs30 billion in line with the current financial year. With foreign assistance and a district annual development program, the total development portfolio of the province stands at Rs459 billion.

"The overall revenue receipts would come to Rs1.679 trillion that includes Rs1.05 trillion as federal transfers, Rs374.5 billion from provincial taxes," said Sindh Chief Minister Syed Murad Ali Shah, who also holds the portfolio of finance department, while presenting the budget in the assembly session.

Giving the break-up of revenue, the chief minister was of the view that his provincial government would collect Rs180 billion in provincial sales tax on services, Rs27 billion in provincial non-tax receipts, and Rs51.132 billion in current capital receipts. However, the provincial government will get Rs105.567 billion from other transfers such as foreign project assistance, federal grants, and foreign grants.

It will also receive Rs20 billion from the head of carry over cash balance and public accounts of the province.

Apart from the above revenue, the Sindh Revenue Board (SRB) would collect Rs180 billion, Excise & Taxation Rs1.20 billion and Board of Revenue Rs30 billion.

During his speech, Murad Ali Shah took exception to the outgoing PTI federal government for not releasing proper funds to Sindh. “The provincial government, during the 11 months has received Rs716 billion against a share of Rs732 billion which shows a shortfall of Rs16 billion," he lamented.

Talking about the development schemes, the chief minister disclosed that 4,158 schemes, including 2,506 on-going and 1,652 new schemes have been given an allocation of Rs332.165 billion.

He further said the on-going schemes have been given allocated 76 per cent funds or Rs253.146 billion while new schemes will get 24 per cent funds or Rs79.019 billion. "Around 1510 schemes would be completed in FY 2022-23," the chief minister announced.

Murad Ali Shah announced an allocation of Rs26.850 billion for social protection and economic sustainability packages, terming the provincial budget as pro-poor.

The chief minister announced that the Adhoc Relief Allowances of the previous five years were being merged at the rates admissible to employees of the federal government. A revised Basic Pay Scale 2022 for government employees of Sindh government was being introduced on the pattern of federal government, he added.

Read Budget debate or a choreographed formality?

He also announced ad hoc Relief Allowance at the rate of 15 per cent of Basic Pay Scales to government servants from 1st July 2022.

“Disparity Allowance at the rate of 33 per cent of basic pay will be paid to government employees working in grade-1 to 16 while civil servants in BPS-17 and above would be paid the allowance at the rate of 30 per cent.”

Shah said his government will match increase in salaries of government with other provincial governments if it is above that of Sindh. "We believe that the salaries and pensions of our employees are better than the employees of other provinces,” he said.

The CM said that the pensioners of Sindh government were already getting 22.5% more increase in net pension than pensioners of the federal government till February 2022. Therefore, he said an increase at the rate of 5% of net pension would be paid to the pensioners of the Sindh Government from 1st July, 2022.

According to Murad Ali Shah, after the announcement of 10% increase in net pension by the Federal Government in March 2022 and enhancement of the rate of increase to 15% from 1st July 2022, the pensioners of Government of Sindh would still be getting 12.5% more of net pension than the pensioners of federal government.

The chief minister also announced to upgrade the post of police constables from grade BS-5 to grade BS-7. The chief minister announced to exempt toll manufacturing services from Sindh Sales Tax (SST) while proposing a two-year 5% reduced SST rate for “recruiting agents” to benefit Pakistanis aspiring to work overseas.

Shah said that the services provided by cable TV operators were levied at a reduced rate of 10%, the existing relief was proposed to be extended for a further period of two years ending on 30th June, 2024. The cable TV operators in rural areas under PEMRA License of “R” Category are proposed to be exempted from SST till 30th June, 2023.

The rate of SST on commission charges received by food delivery channels (like Foodpanda, Cheetay Logistics, etc.) from home chefs has been reduced from 13% to 8% for a period of two  years ending on 30th June, 2024.

In all other cases, the services provided or rendered by commission agents shall continue to be liable to SST at 13%. The existing exemption on health insurance services will continue further for a period of one year till 30th June, 2023.

GIZ, a German development agency, facilitating development projects in Sindh, has also been granted conditional exemption on sales tax on services as indirect relief to the public.

Briefing the house about the education and health budget, the CM said that his government has given the "education sector" a top priority by allocating Rs. 326.80 billion which was over 25 percent of total budget outlay. He further said the Health Sector has also been given top priority by pitching budgetary allocation at Rs 230.30 billion which forms more than 19 percent of total budget outlay.

"The Sindh Government has adopted a policy to either establish a full-fledged university or a campus of a recognized public university in at least seven districts including Korangi, Karachi West, Keamari, Malir, Tando M. Khan, Tando Allah Yar, and Sujawal," he said, adding that Korangi will have a University of Technology & Skill, Vocational/ Industrial

Development, while Karachi West and Keamari will have sub-campuses of this university. Malir will have a sub-campus of NED University. Likewise, Tando M. Khan and Tando Allah Yar will be given sub-campuses of IBA Karachi or Sukkur IBA and Sujawal will have a sub-campus of Mehran University.

About the health budget, he said that the total outlay of the health budget for the fiscal year 2022-23 is earmarked at Rs206.98 billion, covering primary, secondary and tertiary healthcare level services, preventive interventions as well as other communicable and non-communicable diseases. This year the health sector budget is 14% higher in comparison to Rs181.22 billion during FY 2021-22.

For the next financial year 2022-23, the total allocation for law and order, including Sindh police and jails, has been enhanced to Rs124.873 billion from Rs119.98 billion during the current financial year. For the next financial year 2022-23, the budget for irrigation has been enhanced from Rs21.231 billion to Rs24.091 billion.

Regarding transport, the budget books said that the Sindh government has spent Rs6.4 billion in the current year and has earmarked Rs4 billion for the next fiscal year on the Peoples Bus Service. "The project will have 250 buses to be operated on 7 routes of Karachi and one route of Larkana.”

Consultations are underway with China and Turkey for additions of more fleets, he added. In the budget, the Water & Sewerage sector has been given Rs224.675 billion in the financial year 2022-23. The two major schemes of the city will be executed during the coming financial year. For the next financial year, budget allocation for the Social Protection Department has been earmarked at Rs15.435 billion.

In order to improve the wellbeing and welfare of senior citizens, orphans, and the poor, several social programs are being initiated and financed from the next financial year, the chief minister said.