KP Budget 2011-12 : Employees 15% increase in Salaries & Pension 15-20%

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KP budget 2011-12 : Employees 15pc increase in salaries & pension 15-20pc
PESHAWAR (Sunday, June 12, 2011) : Khyber Pakhtunkhwa government on Saturday presented a Rs249.151 billion budget with a total development outlay of Rs85.141 billion and proposed taxes on services, private medical, engineering and business colleges and increase in the Tobacco Development Cess (TDC) during the fiscal year 2011-12.
Finance Minister Engineer Humayun Khan presented the budget in the heavily-guarded provincial assembly in his Pashto-accented Urdu. Belonging to the PPP and hailing from Malakand Agency, it was Humayun’s second budget speech. The atmosphere was friendly in the assembly, which was packed.
The provincial government announced 15 percent increase in salaries of government servants and from 15 to 20 percent increase in the pension. An increase in the allowance of doctors has also been proposed in the budget for the next fiscal. The provincial government also proposed an upward revision in taxes on transfer of valuable and commercial properties in the posh and business areas.
Unveiling what he trumpeted as a realistic and balanced budget, the provincial finance minister said that unlike previous years the capital expenditures of around Rs87.706 billion being borrowed from banks and other institutions on account of state trading for food, grain and sugar were not projected in the total size of the budget.
He said the total revenues would be pitched at Rs249.151 billion while the expenditures were estimated at Rs249.151 billion. He said the Rs87.706 billion capital expenditures on state trading were neither made part of the expenditure nor revenue and would, therefore, have no impact on the total volume of the budget.
The minister said that general revenue receipts for the next fiscal year included Rs149.98 billion under the federal tax assignment, Rs6 billion from net profit on hydel-power generation and the expected receipt of Rs25 billion as arrears of net hydel profit, Rs13.806 billion as straight transfers as royalty on oil and gas and Rs18.022 billion special grants for war on terror that is just 1 percent of the divisible pool. He added that Rs7.349 billion would be available as province’s own receipts, Rs10.030 billion on GST on services, Rs2.115 billion as profit from the hydel power generation projects in the province, Rs16.112 billion as foreign project assistance besides Rs727 million from other resources.
Humayun Khan said the budget carried the expenditures of Rs249.151 billion including the estimated current expenditures of 149 billion. Other expenditures include Rs13.120 billion for health and education, Rs18.801 billion for police, Rs16 billion for payment of pensions and insurances, Rs55.802 billion for salaries to the district governments, Rs10.302 billion to districts for other charges, Rs10.600 billion for the payment of markup on loans, Rs2.304 billion for irrigation sector, Rs1.203 billion for technical education and Rs2.203 billion for works and communication. He said the government will need Rs2.5 billion as food subsidy for wheat.
However, the minister did not mention as to how the government would arrange over Rs85 billion to be spent on food trading during the next fiscal year.
He explained that the provincial government will create 6,992 jobs during the next fiscal year by spending Rs2.90 billion. He said 4,415 of these jobs would be created in the districts while 2,577 would be generated at the provincial level. The government has approved the establishment of new rehabilitation and resettlement department where another 24 people will get jobs, he added.
In an ambiguous way, the minister informed the house about the tax reforms, arguing that the government didn’t want to burden the common man and had, therefore, provided them relief through reduction in Capital Value Tax from 4 to 2 percent which would also lead to a culture of documentation of property dealings. “The registration fee on the rickshaws and motorcycles has been reduced from Rs2,000 and Rs5,000 to Rs200 and Rs500, respectively, while tax relief has also been given on tractors and small cars,” he said.
Humayun Khan said an appropriate increase has been proposed in the Urban Immoveable Property Tax in the townships while low-income areas in Peshawar have been exempted from such an increase. He explained that the government has proposed increase in the property tax on the valuable and commercial property on GT Road and Jamrud Road while professional tax on private medical, engineering and business colleges has also been proposed in the next budget.
He said the ratio of professional tax on big contractors was enhanced and an increase in the transfer and registration fees of vehicles and fees and taxes of the transport department and forest receipts was also proposed.
He said that no increase in the TDC has been made during the last decade and the government was proposing raise in the TDC to collect funds for development projects in the tobacco growing areas.
“The provincial government has, however, proposed overhauling of the collection system of the Agriculture Income Tax and Land Tax as it was not achieving the recovery targets,” he said.
The provincial minister said after the 18th Amendment, the Sales Tax head has also been devolved to the provinces and the provincial government has proposed to collect Sale Tax on services through a financial bill.
He said the services sector has been divided into three categories including stand-alone services, telecommunication and other services. “For different services in the stand-alone category the ratio of tax would be 5 percent while for category-III of other services the ratio would be 16 percent, while terms and conditions for all the categories would be different,” he said.

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