KARACHI - Sindh Chief Minister Syed Qaim Ali Shah on Monday presented the provincial budget for the fiscal year 2013-14 with an outlay of Rs617 billion. The total receiving of the government is projected at Rs595.575 billion whereas expenditure is estimated to be Rs617.212 billion, leaving a deficit of Rs21.7 billion.
The budget allocates a handsome amount of Rs 82 billion for law and order and also proposes the creation of 150,000 new jobs in the next five years.
Speaker Agha Siraj Durrani presided over the budget session of Sindh where the PPP succeeded in retaining the government despite extremely poor governance during the last five years.
During his budget speech, Syed Qaim Ali Shah said the government employees from Grade 1 to 16 will get a 10 percent increment in salaries while Rs5,000 was proposed as the minimum pension. He said the Sindh government was committed to improve the financial conditions of the poor.
Estimated revenue receipt from the Federal Divisible Pool is Rs332.9 billion, 5.9 percent increase over the budget estimate of 2012-13. Receipt under Straight Transfers is estimated at Rs77.1 billion, which is higher than last year’s estimate of Rs59.3 billion. Provincial own receipt is estimated at Rs120.2 billion, which includes Rs42 billion collection of Sales Tax on Services.
The annual development program has been given Rs83 billion. The allocation for energy and health is over Rs21 billion and Rs17 billion respectively. The government earmarked Rs110 billion for education.
The chief minister said: “Sales tax is insufficient and limited to a few service items and at the existing tax base it is not possible to achieve the desirable tax to the GDP ratio. With a view to supplement the national efforts for achieving the NFC-desired tax to GDP ratio of 15 percent by terminal year 2014-15 and also for equitably taxing the service sectors in Sindh , the provincial tax administrations need to be reformed and the tax base needs to be appropriately expanded.
“With great pleasure, I announce that Sindh will not increase the existing standard rate of 16 percent. It will not only contain inflation but shall also not burden the consumers with extra tax or increase prices. Although our net receipts will decrease because of the inputs taxed by federation at 17 percent, the loss of revenue shall be sustained in order to provide relief to the ordinary consumers of Sindh sales taxable services.”
The CM said that services of advertising agents, security agencies, commodity brokers, marriage venues, event management and public bonded warehouses were proposed to be levied. “The services of security agencies would be taxed at 10 percent instead of the standard rate of 16 percent. Small marriage halls and lawns located on plots of 800 square yards or less would remain exempted.”
He said that these services were specified in the amending provisions of the Second Schedule to the Sindh Sales Tax on Services Act 2011.
Exemption on internet and broadband are proposed to be withdrawn. However, internet services of up to Rs1,500 per month shall remain exempt.
Services like beauty parlours (exceeding annual turnover of up to Rs3.6 million) and race clubs are proposed to be brought in the tax net. The beautification services will be taxed at the reduced rate of 10 percent.
The bed tax of 7.5 percent is proposed to be withdrawn. Hotels will continue to pay only the Sindh sales tax.
Syed Qaim Ali Shah said: “Special Development and Maintenance of Infrastructure Cess is being levied for wear and tear on the infrastructure due to the freight entering the province by air or seas and for security.”
It has been proposed to enhance the cess rate from 0.8/.85 percent to 0.9/0.95 percent on various slabs of the imports.
The CM proposed to increase property tax up to 25 percent on annual rental value of the building and land. Increase in license of trade and import of potable liquor and retail of liquor license from Rs600,000 to 800,000 and from 350,000 to 500,000 respectively was also proposed.