Punjab Assembly: Mujtaba defends budget

Winds up budget debate, says house committees will be made more effective.

LAHORE:

Finance Minister Mujtaba Shujaur Rehman responded to criticisms made by opposition and treasury members of the 2013-14 budget in the Punjab Assembly on Monday, defending new tax measures and development spending plans but also backtracking on a few claims in his budget speech.

The session resumed at 11.50am under Speaker Rana Iqbal Khan. The finance minister, as is tradition, was the last person to speak in the budget debate, in which some 50 MPAs participated.

In response to the opposition’s criticism of new tax measures, Rehman denied saying in his budget speech that it was tax-free. He said that the luxury tax on large houses would apply only to properties in “Category A areas”. These were Gulberg, Model Town, GOR-1 and Upper Mall in Lahore, two housing schemes in Rawalpindi and one in Faisalabad.

The tax on five-marla houses, he said, would not be imposed without set criteria and would not be retrospective. This tax was targeted at luxury apartments, he said, in Category A areas and where rents (according to the Rental Value Act of 2001) were above Rs5,000 per month.

He said the capital gains tax would help stabilise the property business by discouraging the speculative sale and purchase of real estate. Property not sold for five years after purchase would be exempt from capital gains tax. Agriculture tax on big landlords would make tax collection more equitable, he added.

Development spending and debt

To criticism about the low utilisation of development funds in the last fiscal year, the minister said that it was around 62 per cent for 2012-13 because the Punjab government had received Rs82 billion less from the Federal Divisible Pool than its share, and the Election Commission of Pakistan had frozen development spending in March ahead of the general elections.

The opposition had suggested that the Punjab government should have paid off some of its Rs445 billion debt with the unused development funds. Rehman said that since the Punjab got less from the Federal Divisible Pool, it was unable to do so.

He said in 2007-2008, Punjab’s debt was Rs247.8 billion – including Rs196.9 billion in foreign loans– which makes a debt to GDP ratio of 4 per cent. In 2012-2013, though debt rose to Rs445.1 billion, it actually fell as a percentage of GDP to 3.9 per cent. He said the roughly Rs200 billion foreign debt increase was largely (Rs127 billion of it) a result of a rise in the value of the dollar against the rupee. The rest, around Rs79.4 billion, was spent on projects of public interest, he said. Domestic loans had fallen from Rs50.9 billion in 2007-08 to Rs41.8 billion in 2012-13.

The minister rejected opposition criticism of spending at the CM’s Office, saying that Rs259 million was allocated for 2012-13 and Rs199.9 million for 2013-14. As many as 177 posts in the CM’s Office had been abolished, he added.

He denied that northern Punjab had been ignored in the budget. While Rs93 billion had been allocated for southern Punjab, the remaining development funds of Rs197 billion would be spent on central and northern Punjab.

Assembly procedures

The minister acknowledged that the Punjab government had failed, despite amending the Rules of Procedure last year, to hold a pre-budget debate, but this was because the assembly’s tenure was about to end in March. He vowed that a pre-budget session would be held next year. He also pledged that the house standing committees would be given powers like those of National Assembly committees.

About the non-allocation of funds for local government elections, he said that it was the Election Commission of Pakistan’s job to hold local polls, not the provincial government. The government had not been able to set up a Provincial Finance Commission, he claimed, because of the absence of local government representatives like district and tehsil nazims. He said the government would set up a new commission.

Changes

The minister had said in his budget speech that the minorities’ fund would be Rs310 million, but announced on Monday that it would be Rs400 billion, a 25 per cent increase from last year. The Punjab Police would be allocated Rs70.5 billion for 2013-2014, 14.6 per cent more than last year’s Rs61.5 billion.

The minister said that the provincial government must follow the federal government’s lead in giving public servants no more than a 10 per cent raise in salaries, otherwise it would destabilise the pay scales system. However, he announced an increase in the minimum pension from Rs3,000 to Rs5,000 per month.

He said that the government was spending Rs16,000 per month on each student at Danish Schools, including on lodging and food, and Rs1,600 per month on each student at public schools. The government’s laptop scheme, he said, would help young people become computer literate, while Danish schools would bridge the gap between rich and poor. These two programmes were allocated two per cent of the education budget, he said.

To criticism that not enough money had been allotted to farming, he said apart from the Rs22 billion agriculture budget, some Rs7.5 billion had been allocated for setting up solar or biogas tubewells and Rs22 billion for irrigation.

Rehman did not give a rebuttal to opposition criticism about the bloated spending on the Forensic Science Laboratory.

The speaker adjourned the session till Tuesday morning, when demands for grants will be presented in the house.

Published in The Express Tribune, June 25^th, 2013.