Sun. Dec 8th, 2019

Ambitious tax targets tough to achieve:CPDI

Islamabad: Centre for Peace and Development Initiatives (CPDI) reacts to federal budget 2019-20 with concern as development allocations for education and health sectors decrease while ambitious tax targets and multi folds increase for climate change and Water Resources seem tough to achieve.

The volume of Federal Development Budget 2019-20 is RS. 949,896 million. The share of education sector for the year is set at RS. 33,780 million which is far less than the previous year allocation of RS. 42,766 million. Similarly, the health sector development allocation in the federal budget has also declined as compared to the last year. The government has earmarked RS 12,671 million for development is health sector while the allocation in last year’s budget was RS. 29,999 million. It is also distressing to note that that the government failed to implement 2018-19 allocations by huge margin. Hence these sectors are not only ignored for the coming fiscal year but were also overlooked in the current fiscal year. Ignoring two most important sectors of Education and Health is of grave concern to CPDI.

Pakistan is among top ten “most vulnerable to the climate change” countries but government’s development allocations to combat climate change have not been adequate in the past. However, for fiscal year 2019-20 a sum of RS. 7,579 million has been earmarked for development expenditures in the sector. This allocation is 0.79% of the total estimated development budget and 9 times higher than the last years allocation. Higher allocation to face the challenge of climate change is a great sign but at the same time it alarms concerns as the analysis of historic budget data since 2013-14 reveals that the government has never been able to disburse even 0.1% of the total development budget on this sector. This huge allocation will be a challenge for the ministry’s ability to disburse resource and carry out large projects. These details were provided by CPDI’s Senior Program Manager Raja Shoaib Akbar in a statement issued to media.

He further said that the water and power sector was split into two separate divisions during fiscal year 2017-18. The purpose was obvious, better planning and development in both very important sectors. This arrangement seems to have positive outcome for water management division; the budget allocation of RS. 85,021 million for the sector in year 2019-20 is encouraging as was in the year 2018-19 when RS. 79,000 million (6.86% share in development budget) was allocated. But a look at the revised estimates of year 2018-19 reveals that this large allocation was actually reduced to mere Rs 3,789.5 million. This situation is cause of great concern for CPDI. Huge allocations and then drastic declines at the end of the year points out negative trends and misplaced priorities. Water management is need of the hour, better allocations are a welcomed step, the government must be careful in execution of these resources and make sure that low capacity of the ministry and traditional shift of priorities does not hamper the huge allocation this time.

The target for tax Revenue Receipts for year 2019-20 has been set at Rs 5,822,160 million. This is encouraging but at the same time highly ambitious. The analysis of historical budget data since 2013-14 by CPDI shows that targets of Tax Revenue Receipts in all these years could not be achieved except in year 2015-16. The target for year 2018-19 was RS. 4,888,645 million which could not be met hence revised to a lower level of Rs 4,393,876 million at the end of the year. Keeping in view the data trends new target of Rs 5,822,160 million seems tough and extremely demanding. In this scenario, to achieve the tax revenue targets for the year 2019-20, CPDI urges the government to reform and strengthen the FBR and also expand the tax base instead of overburdening the already existing taxpayers.NT

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