The Sindh government has lodged a strong protest against the federal budget proposed by Finance Minister Senator Ishaq Dar for the year 2015-16 and appealed to the prime minister to withdraw some budgetary proposals which are detrimental to the Sindh finances and are severely affecting provincial receipts and next year’s budget preparations.
Sindh Minister Finance Syed Murad Ali Shah lodged this protest in a letter written to Ishaq Dar and pointed out that the Finance Bill 2015 carries some measures which directly encroached upon the constitutional domain of the provinces under sales tax on services, gas development surcharge, non-imposition of excise duty on crude oil, Federal PSDP and this would affect the share of the province from divisible pool taxes.
Officials claimed that these reasons have the main causes in delay of the preparations of the Sindh budget and finally the Sindh decided to lodge protest with the center for this injustice.
According to the details mentioned in the letter of Sindh finance minister, Sindh had received its share less than the estimated in federal budget in 2014. According to document, the Sindh received Rs 287.958 billion up to May 31, 2015, while the share of the Sindh in revised estimated share was Rs 381.383 billion and as per this estimate the Sindh would have amounted Rs 93.425 billion. The minister pointed out that more shortfall in this regard would result into severe financial crisis for the government of Sindh.
It also mentioned that more reduction in revised estimates of straight transfers, the finance division communicated that Rs 61.499.934 million have been fixed as target for budget estimate 2015-16 showing a decrease of Rs 21.123.887 million comparing to budget 2014-15 under straight transfers of Sindh. The letter complained that such as massive reduction in targets for 2014-15 and 2015-16 has put the Sindh government in precarious position especially in setting its overall size of the revised estimate 2014-15 and 2015-16.
The Sindh also pointed out that the withdrawal of sales tax on services from banking, insurance services, franchise, telecom, NBFC and restaurants would also affect the Sindh budget. It also pointed out that the amendment in the definition of ‘services’ in section 2 Clause 33 (1) and (d) of the finance bill 2015 will harm the provincial government efforts in levying sales tax on services.
It also mentioned that the Sindh Revenue Board (SRB) not received Rs 1.745.56 million from FBR and urged the Islamabad to transfer this amount in mid June.
The Sindh finance minister also pointed out that under the PSDP 2014-15, Rs 525 billion included an allocation of Rs 14.47 billion for GOS executed projects in Sindh which was hardly 2.7 percent of the total PSDP. A block allocation of Rs 8 billion was also kept to beef up the existing allocations. The size of next year PSDP has been augmented to Rs 700 bilion (including Rs 100 billion for IDPs). However, only Rs 6.7 billion has been allocated for schemes being executed by Sindh government in PSDP 2015-16. It is 0.97 percent of the size of PSDP. Therefore, the Sindh government requests to allocate funds at least to the level of the last year’s allocation of Rs 14.47 billion for Sindh.
The Sindh finance minister also pointed out that under the agreed joint plan for the greater Karachi Sewerage plan (s3) the federal government provided only Rs 829 million while the Sindh government released and proposed allocation for next year will be Rs 2.970 million. It also made request to the federal government to allocate Rs 2.141 million in next PSDP to match the funds.
It also mentioned that the K-4 is strategically important project for Karachi and total cost of the project is Rs 25.55 billion and federal government has agreed to finance 50 percent of the total cost. However, the federal budget indicated that FG will contribute Rs 2 billion for this project which also not credited to the Sindh. This should also require expedited and transferred with the next bi-monthly federal transfers in mid-June.
