Provincial share of taxes in total revenues declines to 11% in July-Sep FY19

Notably, Sindh was an exception compared to the other three provinces which posted a growth of 10.8% in provincial taxes during the 1st quarter of FY19


ISLAMABAD: The share of taxes from provinces in total revenues has fallen to 11% in the first quarter (July-Sep) of FY19 except for Sindh, raising their dependency on National Finance Commission (NFC) funding to manage expenditures.

During the 1st quarter of FY19, the four provinces in total collected Rs88.6 billion in taxes, which was 2% or Rs1.7 billion higher over the corresponding period of last year, reports Express Tribune.

In comparison, the Federal Board of Revenue fared much better, posting approximately 8% growth in revenues during the 1st quarter of the current financial year 2018-19.

Consequently, the share of provincial tax contribution to the overall revenues declined to 11% from 15% previously.

And the remainder of the provincial revenues were a result of federal transfers under the NFC award, provincial non-tax revenues, federal loans and grants.

The provincial tax collection was recorded at a meagre 0.22% of gross domestic product (GDP) and the provinces are entitled to collect general sales tax on services, provincial excise and stamp duties, income only on agriculture and motor vehicle taxes as per the constitution.

Interestingly, provincial share in federal revenues rose to 84% or Rs663 billion of the overall revenues in the first quarter of FY19, somewhat because of delayed transfers by the federal government.

Likewise, the provincial governments’ current expenditure also posted a double-digit increase and they cut their development spending to Rs55.7 billion, 41.7% less than the corresponding quarter of last year.

Punjab’s tax collection during the first quarter was recorded at Rs42.6 billion, which was 5.3% or Rs2.4 billion lower as per the fiscal operations summary.

Consequently, Punjab’s share of tax collection in overall revenues declined to 10.8% from 16% previously.

The Punjab government received Rs326 billion from the federal government under the NFC Award, an increase of 63%.

However, the provincial was able to save Rs126.4 billion from its budget and its collection in shape of sales tax on services declined 8.7% during the 1st quarter of FY19.

In the aforementioned period, Punjab’s total expenditures rose to Rs264.4 million, however, development funding was cut by 54% to Rs30.3 billion.

Notably, Sindh was an exception compared to the other three provinces which posted a growth of 10.8% in provincial taxes during the 1st quarter of FY19.

It amassed Rs40 billion in taxes, which comprised around one-fifth of the total revenues and its sales tax collection also grew by 10% to Rs20.6 billion.

Under the NFC award, Rs163.7 billion was transferred to Sindh, higher by 53.7% highlighting it was impacted by the blockade of funds by the finance ministry.

Sindh was able to save Rs64 billion out of Rs163.7 billion and its total expenditures rose to Rs139 billion, however, the development spending reduced to Rs13.2 billion during the 1st quarter of FY19.

Khyber-Pakhtunkhwa’s tax collection stood at a meagre Rs4.1 billion which was equivalent to 3.6% of total revenues.

Under the NFC award, KP received Rs107.7 billion from the federal government, an increase of 62.6% and posted a cash surplus of Rs29.4 billion.

KP’s total expenditures grew 30%, touching Rs86.6 billion in the first quarter of current FY19.

However, its development spending fell to Rs10.8 billion, which was lower than the corresponding period of last year.

Balochistan’s tax collection was recorded at Rs2 billion during July-September FY19, which was 2.8% of the total provincial revenues.

The country’s largest province by size received Rs65.6 billion under the NFC award, an increase of 18.5%.





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