The Balochistan miracle

The finance ministers from all over the world should soon be landing in Quetta. Well, if law-and-order situation does not allow, at least Ishaq Dar and his provincial counterparts should definitely take the first available flight, sit with Balochistan’s finance guru, plead him if need be and ask how he managed to achieve an unbelievingly high proportion of direct taxes of 97 percent.
Take a deep breath, read again! Yes, that is what at least the Balochistan budget document wants us to believe. Only that we never knew that sales tax on services is a part of direct taxes. The Rs1.8 billion was collected in that lieu last year from the chunk of total taxes and ‘direct’ taxes. And, if you are not surprised yet, let us also tell you that excise duty is also a form of direct tax. Little else explains why only Rs80 million is shown under Balochistan’s indirect taxes and all else under direct taxes.
Yes, these are not big enough numbers, as provincial tax receipts are hardly two percent of total receipts. But, there is nothing much else to talk about as the budget has been termed as ‘same-old’ by critics. The total outlay of the budget is Rs215 billion, and Balochistan is the latest one to spoil the Federal Government’s expectations of provincial surpluses-–by announcing a deficit of Rs15 billion.
Balochistan continues to face the capacity issue, evident from a lot of budget numbers. Missing targets is a norm for every budget, but Balochistan seems to take a good lead in this aspect. The most striking part is that the provincial government managed to lock in more receipts than envisioned in 2013-14, and yet managed to post the deficit and axing the most favoured scapegoat—the development spending-–at the same time.
Balochistan’s own tax collection continues to be paltry, although there was a significant improvement in tax receipts over the budgeted amount. The province managed to collect Rs3 billion in taxes last year, double the budgeted figure of Rs1.5 billion.
But, here is another number to strike you. Balochistan is surely not known for its agriculture, so one should not expect significant tax on agriculture income. But, Rs500,000 for the whole year: Really? Some serious capacity building is required, in which context the White Paper says the government has decided to bring some changes in current laws. One wonders what these changes would result in as the budgeted amount under agriculture income for FY15 is projected to be Rs500,000-–an increase of huge nothing over last year’s revised numbers.
On the expenditure front, the trend seems to have continued with 23 percent and nine percent of development expenditure on educational and health, respectively. The proportion is exactly the same as budgeted for the previous year. That, the lack of capacity resulted in lesser actual spending is another story, and nothing tells that this won’t be repeated. Maybe, the Balochistan government can only do this much with little economic activity, but, it would be the best advised to put the basics right and not be mocked next time around.