The Chief Minister on Finance, Muzzammil Aslam, announced that the Khyber Pakhtunkhwa (KP) government is taking significant measures to reduce expenses due to delays in federal dues. Speaking at a post-budget news conference, Aslam outlined the province’s financial strategy, including adjustments in tax policies and development funding, amidst ongoing financial challenges posed by the federal government’s inaction.
During the conference, Aslam expressed frustration over the province not receiving any funds from the federal government as net hydel profit. Highlighting the province’s financial situation, he stated that KP is expected to receive Rs1.2 trillion from the federal government in the upcoming fiscal year, while the provincial revenue generation is projected at Rs93 billion.
The provincial government plans to secure Rs122 billion in foreign loans for various development projects. As part of the budget, Aslam proposed a 10% increase in the basic salary of provincial employees, demonstrating the government’s commitment to supporting its workforce despite financial hurdles.
To manage the financial shortfall, the KP government has introduced several tax adjustments. The property tax rate has been reduced from 6% to 3.5%, while the tax on private housing societies has been increased. Additionally, the cess on tobacco has been raised, reflecting the government’s strategy to generate more revenue from certain sectors.
Aslam announced a fixed tax on wedding halls and a reduction of the tax on restaurants to 6%, aiming to strike a balance between revenue generation and economic relief for businesses.
The provincial government has decided not to impose taxes on the merged tribal districts and Malakand Division. Aslam urged the federal government to adopt a similar stance, highlighting the need for a unified approach to taxation in these regions.
Addressing the delay in federal budget announcements, Aslam mentioned that the federal government is currently negotiating with the International Monetary Fund (IMF) for loans. This has contributed to uncertainty regarding the budget timeline. He noted that even if the federal budget is presented on June 7, the provincial government would have limited time to pass its own budget before Eidul Azha, expected on June 17 or 18.
Aslam defended the provincial government’s decision to present its budget before the federal budget, stating, “We have not bypassed anyone, nor is there anything in the law stopping us from presenting the provincial budget before the announcement of the federal budget.”
The provincial budget is based on four key principles: revenue maximization, expenditure reduction, resource mobilization, and targeted taxation. Aslam emphasized the government’s focus on providing relief to those in need while ensuring that those who can afford it contribute their fair share.
The adviser voiced concerns about the potential shortfall in federal transfers, specifically mentioning the expected Rs46.8 billion under the windfall levy and Rs111 billion in net hydel profit. These anticipated funds are crucial for the province’s financial stability.
Opposition members in the KP Assembly have raised questions about the provincial government’s decision to present its budget before the federal budget announcement. Leader of the Opposition, Dr. Ibadullah Khan, criticized the provincial government for complaining about the federal government while acknowledging that 92% of its total annual expenditure is funded by the center.
Dr. Khan, along with PPP leader Arbab Zarak and PML-N leader Zahir Khan, highlighted the uncertainty surrounding federal funding allocations from the National Finance Commission Award and decisions by the Council of Common Interests.
Dr. Khan also criticized the Peshawar Bus Rapid Transit (BRT) project, describing it as a “white elephant.” He pointed out that the government has allocated Rs3 billion as a subsidy for the BRT, arguing that these funds could have been used to construct 250 schools in the province, thereby addressing more pressing needs.
