Amid deafening opposition protests, reminiscent of how the incumbent Punjab government's members acted when in opposition during the previous administration's five budget speeches, the remaining eight-month budget was presented by Makhdoom Hashim. Apart from accusations of flawed priorities in mega development projects by the Shahbaz Sharif-led government, the orange train line featuring prominently in a critical light during the speech though it was allocated 33 billion rupees, as well as heavy reliance on borrowing to undertake mega projects that raised Punjab's indebtedness significantly, the Punjab Finance Minister made two disturbing pronouncements during the budget speech. First, that the budget would be tax-free, again reminiscent of the previous provincial administration; and in common with what was claimed by the federal finance minister Asad Umar in the supplementary amendment finance bill 2018 that additional revenue would be generated through improved collection and tax reforms which included extending the retention time period of record and recovery from five to eight years, plugging compliance gaps on tax on services by modifying to remove gaps and misapplications of the law and proposed raising the rate of tax imposed on imported cars.
With respect to improved collection machinery, it is relevant to note that Asad Umar envisaged raising an additional 92 billion rupees from improved collection (technical improvements) though he dismissed genuine efforts made by the Zardari-led government as well as the PML-N administration to widen the tax net based on data provided by Nadra, which later showed that an extremely large percentage of non-filers was actually allowed by law not to file their returns. Few reckon that revenue collection from technical improvements would actually rise and by as much as 92 billion rupees which after the country goes on an International Monetary Fund programme would imply a mini-budget - either as a pre-programme condition or during programme condition,
Punjab Finance Minister Hashim envisages a 17 percent rise in tax collections through improved collections and reforms - or around 96 billion rupees more. Federal Board of Revenue's (FBR's) capacity to undertake an effective audit exercise is very limited (a senior FBR official stated last month that its audit functions are severely compromised by massive shortage of qualified staff) while the situation in the province is unlikely to be better. Though the FBR signed an MoU in July this year with three provincial authorities - Punjab Revenue Authority, Khyber Pakhtunkhwa Revenue Authority and Sindh Revenue Board - for reconciliation of cross-adjustments of input tax and payment of net amount by the beneficiary agency to the other with Punjab earmarked an additional 1.8 billion rupees (Balochistan Revenue Authority has not yet entered into any agreement with the FBR on this issue), however some issues remain pending which would need to be resolved.
Secondly, Hashim stated that the provincial surplus has been set at 148 billion rupees. Here too little seems to have changed given that like at present, during the previous five years the same party was in government in the centre and Punjab. The Punjab Finance Minister lamented the fact that the previous government budgeted 635 billion rupees for development for the entire year but spent only 411 billion rupees - a containment reflective of the usual mode of reducing the deficit. He then proceeded to slash development budget for the remaining eight months of the fiscal year to 238 billion rupees. However, the expenditure priorities between the budgets presented during the PML-N and the incumbent PTI government were different though time will tell whether these allocations have been disbursed by the end of the year.
To conclude, there is little on the Punjab budget's envisaged revenue side that would lend comfort to the general public or the multilaterals and at the same time there are some changes to the expenditure side whose impact would be evident by the end of the year.
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