#Pakistan - Three provinces except Sindh fail to increase tax collection

Imran Ali Kundi

Punjab, KP, Balochistan heavily relying on resources received from centre under National Finance Commission award.

Pakistan’s three provinces except Sindh have failed to increase their tax collection during six months as they are heavily relying on resources received from centre under National Finance Commission (NFC) award.

The tax collection of four provinces has recorded at Rs187.7 billion during first half (July to December) of the ongoing fiscal year as against Rs176.4 billion of the corresponding period of previous year, showing growth of only 6.43 percent. The increase in percentage in provincial tax collection is due to 14 percent growth in tax collection of Sindh province. Growth in tax collection in other three provinces is negligible, according to official documents of the ministry of finance.

“Provinces except Sindh have not increased their own tax collection because they are receiving sufficient resources from federal government under NFC award,” said an official of the ministry of finance. He further said that federal government and provinces should devise a strategy to boost the tax collection in the ongoing talks for new NFC award. The provincial governments have the right to collect general sales tax on services, provincial excise and stamp duties, motor vehicle taxes and income tax only on agriculture, according to the constitution.

Apart from provinces, the Federal Board of Revenue (FBR) is also struggling to achieve its annual tax collection target. The FBR’s tax collection has gone to Rs191 billion in seven months. The FBR’s provisional collection stands at Rs2,060 billion against the desired target of Rs2,251 billion for the first seven months (July-January) period, indicating a shortfall of Rs191 billion. The Federal Board of Revenue (FBR) has requested the government to revise downwards the tax collection target. The government had set Rs4398 billion tax collection target for the current fiscal year. However, the FBR is struggling to achieve the target despite announcing two supplementary finance bills in last five months.

Sindh

According to the official documents, the Sindh government has improved its tax collection by 14.8 percent. The Sindh government collected Rs83 billion during July-December period of the year 2018-19 as compared to Rs72.2 billion of the corresponding period of the previous year. On the other hand, Sindh government has received Rs297 billion from the federal government during July to December period of the year 2018-19. The Sindh would receive Rs648.8 billion during entire current fiscal year.

Punjab

Punjab’s tax collection has marginally increased to Rs92.8 billion during July-December period of the year 2018-19 as compared to Rs91.8 billion of the corresponding period of the previous year. The Punjab government has received Rs583.3 billion from the federal government during first half months of the current fiscal year, which is 45.5 percent of the annual share of Rs1282 billion.

Khyber-Pakhtunkhwa

The KPK’s tax collection has also enhanced marginally to Rs8.7 billion in first half of the ongoing financial year from Rs8.4 billion of the same period of last year. The province has received Rs195.9 billion from the federal government under NFC during first half of the current fiscal year.

Balochistan

Balochistan’s tax collection has slightly decreased to Rs3.6 billion during July-December period of the year 2018-19 from Rs4 billion of the corresponding period of the previous year. The province has received Rs123 billion in first six months from the federal government, which is 58.7 percent of Rs233.2 billion to be released in the ongoing financial year under NFC.