Sindh good at taxing, not so at social spending

While presenting the annual budget for the province, Sindh Finance Minister was critical of the Federal Government for failing to transfer the provinces stated share in revenues. This shortfall is a direct consequence of FBRs inability to collect taxes in line with its target for the year.
Although the provinces own tax collection was also short of its intended targets, the performance of Sindh Revenue Board is marginally better than counterparts in other provinces; both in terms of collection tallies and in terms of broadening the tax net.
A positive development on the taxation front is that the ambit of sales tax on services has been extended to more professions. More importantly, the provincial authorities have announced plans to shift from a positive list to a negative list for the collection of this tax. That means only those professions that are specifically mentioned in the negative list will remain exempt from the tax while all others will be liable to pay it.
But when it comes to social uplift, the Sindh government's failure is abundantly evident, from stagnating literacy levels, to worsening shortages of drinking water and sanitation facilities. The provinces approach towards social development is severely disjointed. The Annual Development Plan contains scores of small projects; that are each running in isolation and often in duplication to others.
So even though Sindh Finance Minister Murad Ali Shah has stated that roads are a top priority for the government in this fiscal, the break up of the Annual Development Plan does not support his claim. Funding for education and health may appear to have raked up, but the sad fact is that lion's share of these is comprised of non-development expenditures, especially salaries. With a 10 percent salary hike announcement, much of the increase in education and health spending can be expected to fund the relevant payrolls.
The minister also announced plans for five different rapid transit bus routes; each of which will be financed through different modes. The Green Line Bus, which is to be solely financed by the federal government will likely, be the first project to go into implementation mode. The provincial governments performance in this realm may be gauged by the Blue and Red lines, which is to be financed along with private partners.
But before popping the bubbly on these new projects, it is pertinent to note that a number of roads and flyover projects within Karachi have been stalled for at least four years. Ribbon cutting ceremonies at new sites may present fleeting photo opportunities, but the persistent traffic issues plaguing the provincial capital continue to belie any claims of prioritizing road infrastructure.
In the outgoing year, actual development spending was down by a quarter when compared to the budgeted development spending. On the other hand, non-development expenditures exceeded their budgeted tally by more than Rs18 billion.
This years ADP is envisioned at Rs214 billion with a provincial component of Rs177 billion. Other major allocations include Rs64.45 billion set aside for maintaining peace and order; Rs57.5 billion for health spending, Rs144.6 billion for education and Rs25.9 billion for energy projects. Conspicuous by its absence, was any allocation for provision of clean drinking water which is an emerging problem within the cities and towns of the province.