As FBR falls short of target, Punjab’s share in federal taxes drops

Province gets Rs126 billion less than its share of Rs650 billion.

Anwer Sumra July 20, 2013
Falling short: Rs90.5b was the revenue collection made by Punjab against the target of Rs95b for fiscal 2013. DESIGN-FAIZAN DAWOOD/FILE


The Punjab government has seen its share in the federal tax pool fall by Rs126 billion following a huge shortfall of Rs456 billion in the country’s revenue collection in financial year 2012-13, which stood at Rs1.925 trillion against budgetary target of Rs2.381 trillion, The Express Tribune has learnt.

Initially, the Federal Board of Revenue (FBR) had fixed the revenue collection target at Rs2.381 trillion for the previous financial year, but later because of a number of factors and a sharp fall in revenues, it revised the target downward to Rs2.007 trillion.

In the divisible pool, the share of Punjab was set at Rs650 billion according to the formula of the National Finance Commission (NFC) Award.

Until the end of June, the provincial government received Rs524 billion from the Centre, Rs126 billion less than its share of Rs650 billion, an official aware of the figures said.

This badly hurt the size of Punjab’s Annual Development Plan (ADP), forcing the province to cut the ADP from Rs250 billion to Rs166.8 billion. Of this amount, Rs134 billion was spent on development programmes until the end of previous fiscal year on June 30.

Provincial tax collection

In addition to the decline in its share in federal taxes, the Punjab government’s tax collection in the province also fell short of the target as it netted Rs90.5 billion against the target of Rs95 billion for financial year 2012-13, lower by Rs4.5 billion, the official said.

In the provincial budget, Punjab had fixed Rs129 billion revenue target including Rs95 billion from tax and the remaining from non-tax sources. Though tax revenue decreased by Rs4.5 billion, non-tax revenue crossed the target as the province received grants of Rs11 billion from the central government and Rs7 billion from UK’s Department for International Development (DFID) during the year.

The Punjab government also established Punjab Revenue Authority to collect sales tax on services, which netted Rs37 billion in 2012-13 compared to Rs26 billion received in the same head, which was collected by the FBR, in the previous year, the official said.

According to a senior official of the Punjab Finance Department, cash balance at the end of 2012-13 stood positive despite utilising the overdraft facility in the last five years to meet government expenditures – both development and current.

The overdraft limit was Rs37.5 billion, but the province did not cross it in the past five years, he added.

FBR Chairman Tariq Bajwa, in an informal chat with The Express Tribune, said his priority would be to ensure budgetary revenue collection as its effects trickled down to the provinces. In an effort to increase tax revenues, efficient collection would be ensured, Bajwa added.

Published in The Express Tribune, June 21st, 2013.

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