Provinces have been able to generate only Rs 146 billion against budgeted Rs 289 billion surplus for the current fiscal year as their share in federal taxes and straight transfers was reduced commensurate with a shortfall in revenue collection. An official on condition of anonymity said the Federal Bard of Revenue (FBR) is unlikely to achieve even the thrice downward revised revenue collection target of Rs 2605 billion which in turn would have further negative implications on provincial share of federal taxes and consequently their share in the federal taxes.
The budget 2015-16 documents note the provinces'' share in federal taxes and straight transfers was revised downward to Rs 1574 billion from Rs 1720 billion for the outgoing fiscal year. In other words provinces would receive Rs 146 billion less than what was budgeted which, in turn implies, Rs 148 billion lower provincial surplus. Provincial surplus which was estimated at Rs 289 billion has now been revised downward to Rs 141 billion for the current fiscal year.
Increased government bank borrowing to meet the deficit in provincial surplus was noted in the budget 2015-16 documents. Bank borrowing, budgeted at Rs 227 billion, has therefore been revised upward to Rs 402 billion. An official of Finance Ministry on condition of anonymity said that it appears unlikely that the government would be able to achieve fiscal deficit of 4.9 per cent in spite of increased reliance on borrowing.
As per revised estimates, Punjab province would receive Rs 751 billion as its share in federal taxes and straight transfers against budgeted Rs 812 billion; Sindh would receive Rs 413 billion against budgeted projection of Rs 464 billion; Khyber Pakhtunkhwa province''s share in federal taxes and straight transfers has been revised downward to Rs 254 billion for the current fiscal year from budgetary projection of Rs 283 billion and Balochistan province would receive Rs 154 billion - down from Rs 159 billion. Divisible pool tax collections have been revised downward from Rs 1580 billion to Rs 1476 billion for the current fiscal year. A reduction from 2014-15 budgeted estimates of collections for various taxes is as follows: Rs 37 billion slash in taxes on income; Rs 44 billion in GST; Rs 9 billion Federal Excise Duty; and Rs 13 billion in Customs Duties. The share of straight transfers in the divisible pool has also been revised downward to Rs 97 billion from budgeted Rs 139 billion with a Rs 11 billion reduction in royalty on crude oil, Rs 12 billion on royalty on natural gas and Rs 16 billion on natural gas development surcharge.