Punjab presents Rs2.3tr tax-heavy budget
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Pakistan - Punjab - June 15, 2019

Punjab presents Rs2.3tr tax-heavy budget

LAHORE   –   Loaded with heavy taxes, Punjab government presented Rs2.3 trillion surplus budget for the fiscal year 2019-20 with a development outlay of Rs350 billion.

Finance Minister Makhdoom Hashim Jawan Bakht delivered the budget speech amid the uproar by the opposition legislators, who stood up from their chairs, tore apart copies of budget document and chanted full throat slogans against the top PTI leadership.

Besides increasing the rate of a number of existing taxes, including stamp duty, the government has proposed taxes on businesses and professions previously not falling into the tax net.

The government has proposed bringing all stock brokers, money changers, doctors, hakeems, homeopaths, contractors, builders and property dealers into the tax net.

Company with up to Rs5 million liquidity has been proposed to pay Rs10,000 annual tax, that of up to Rs50 million Rs30,000, up to Rs100 million Rs70,000 and that of more than Rs100 million will pay Rs1,00,000.

An annual tax of Rs1,500 has been proposed on factories with workforce of up to 10 persons, Rs5,000 on those employing 25 and Rs7,500 on those employing more than 25 persons.

Government has also proposed Rs1,000 tax on lawyers, Rs2,000 on jewelers and cable operators, Rs4,000 on health clubs/gymnasiums in metropolitan limits and cigarette/tobacco dealers, Rs6,000 on audit firms, taxation consultants, architects, money changers, engineering and scientific consultants, Rs6,000-10,000 on motorcycle/scooter dealers, Rs10,000 on stock exchange members, Rs10,000 on motor car dealers and real estate agents in small cities and Rs20,000 on those working in metropolitan corporation limits.

The provincial government also proposed Rs20,000 tax on recruiting agents, Rs1,000 on contractors/builders with business volume of up to Rs1 million and Rs6,000 on those exceeding the said volume.

It proposed Rs5,000 tax on medical consultants/specialists and dental surgeons, Rs4,000 on registered medical practitioners and Rs4,000 on homeopaths and hakeems.

Giving the reasons behind revising tax rate and imposition of new ones, the government stated it was aimed at broadening the tax net.

Tax has also been proposed on high value properties along highways and motorways in order to broaden the tax base. Registration fee for imported vehicles has been increased and brought at par with that being charged in Islamabad and other provinces to ensure uniformity of fees and rates across Pakistan.

Property tax relief has been proposed for divorcee women and single female orphans in line with relief already being provided to widows; and outdated rates of Professional Tax have been proposed to be rationalised.

The government said that apart from change in some penal provisions, these amendments provide for minimum tax  liability, updating of appeal related provisions, improvement in recovery of tax and introduction of a modern electronic invoicing system to plug revenue leakages.

Descriptions of some taxable services have been modified for removal of gaps and misapplications and updated for a clearer understanding of tax obligations, it said. Moreover, some new services have also been included in the tax net.

The overall objective is to broaden the tax base of Punjab Sales Tax on Services, to achieve eventual goal of a Negative Tariff List for Punjab Sales Tax and maximising mobilisation of revenue in public interest, the government maintained.

 Details of sectoral allocations

The Rs2.3 trillion budget presented at the Punjab Assembly by Finance Minister Makhdoom Hashim Jawan Bakhat is slightly bigger than last year’s Rs2.026 trillion financial outlay.

Giving a break-up of the budget during his speech, he said that allocation of Rs350 billion has been proposed for development while Rs1.717 trillion has been put aside for non-development expenditures.

He said that general revenue receipts for FY 2019-20 were estimated at Rs1.99 trillion, while the province was expected to receive over Rs1.60 trillion under the National Finance Commission (NFC) award.

The minister said that the total provincial revenue was estimated at Rs388.4 billion. He said that the total estimate for ongoing expenditures was Rs1,298.8 billion, containing Rs337.6 billion for salaries, Rs244.9 billion for pension, Rs437.1 billion for local governments and Rs279.2 billion for service delivery. He said that Rs233 billion would be surplus that would help overcome the national budget deficit and the same would be available in the coming fiscal year.

Hashim said that allocation of Rs350b has been proposed for development which was 47 percent more than the outgoing financial year. He said that 35 percent of the development allocation would be spent in southern Punjab.

Giving break-up of the development allocation, he said that Rs125b has been allocated for social sector, Rs88b for infrastructure development, Rs34b for production, Rs21b for services and Rs17b for other sectors. He said that Rs42b has been put aside for public-private partnership and Rs23b for special programs.

The minister said that the government has proposed allocation of Rs279b for the health sector which was 20 percent more than the outgoing fiscal year. He said that Rs40b has been allocated for the establishment of nine state of the art hospitals in Lahore, Layyah, Rawalpindi, Mianwali, Rahimyar Khan, DG Khan, Multan, Bahawalpur and Rajanpur.

He said that the government was starting work on Fatima Jinnah Institute of Dentistry, a project put under the carpet by the previous regime for political reasons. He said that Rs2b has been allocated for extending Health Insaf Card scheme to 36 districts in the current fiscal year.

Giving details of projects under Punjab Ehsas Program, the minister said that Rs3b has been allocated for giving Rs2,000 monthly financial support to elderly people, Rs3.5b for supporting 2 lakh disabled people, Rs2b for supporting widows and orphans under Surparast program, Rs200m for welfare of transgender, Rs100m for rehabilitation of acid attack victims, Rs8b for financial empowerment of women and Rs300m for financial support of families of civilian martyrs of terrorist attacks.

After the success of Panagah project, he said, nine Panagahs would be set up at divisional headquarters.

The minister said that record Rs383b has been allocated for education. He hoped that evening shifts under Insaf School Program would help improve literacy rate.

Makhdoom Hashim said that six new universities would be set up in Murree, Chakwal, Mianwali, Bhakar, Rawalpindi and Nankana Sahib. He said that work on 63 colleges would be completed at a cost of Rs2b. The minister said that Rs1.76b has been allocated for providing missing facilities at 68 colleges. He said that Rs8b has been allocated for Aab-e-Pak Authority for providing clean drinking water in rural and far flung areas.

He said that Rs40.76b has been allocated for agriculture, which is more than double of the previous year’s allocation. He said that Rs7.85b has been allocated for subsidy on fertilizers and seeds, e-credit and crop insurance. He said that model auction markets would be set up besides issuance of agri smart card for bringing subsidy in the direct access of growers.

Hashim said that forest department would plant 550m trees during the next five years. He said that Rs3.43b have been allocated for this purpose.

He said the government has planned setting up Allama Iqbal Industrial City in Faisalabad. He said that industrial park would be set up in Muzaffargarh on public-private partnership and a small industrial park in Taunsa.

After the budget speech, Speaker Chaudhry Parvez Elahi adjourned the session till Monday, June 17, at 3pm.

 

Revenue/Receipts

Revenue target set at Rs388b

Rs1,601b to come from NFC award

Rs350b allocated for development

Rs1717b for non-development outlay

Expected surplus Rs233b

Sector-wise allocations

Rs383b for education

Rs279b for health

Rs125b for social sector

Rs88b for infrastructure development

Rs42b for public-private partnership

Rs40.76b for agriculture

Rs34b for production

Rs23b for special programs

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