In unusual move, KP assembly presents FY25 budget before centre

Khyber Pakhtunkhwa (KP) Finance Minister Aftab Alam Afridi on Friday presented the provincial budget for the fiscal year 2024-25 in the KP Assembly.

In a rare move, the KP assembly tabled the budget before the announcement of the federal budget that is likely on June 7.

On Thursday, KP’s Chief Minister Ali Amin Gandapur in a statement said that the provincial government would present a “historical welfare relief budget for the people of the province”.

The provincial government proposed a budget of Rs1,754 billion for FY25, with a surplus of Rs100 billion.

It expects to receive Rs1,212.036 billion from the federal government in taxation in the upcoming fiscal year.

Salaries, pensions, and minimum wage

The KP government proposed a 10% increase in both salaries and pensions of the provincial government employees while raising the minimum wage to Rs36,000 from the current Rs32,000.

Education, health, and law & order

For education, he informed that a total of Rs362.68 billion was allotted, 13% higher than the previous financial year.

Similarly, Rs232.8 billion was proposed for the health sector, 13% higher than last year.

To maintain peace in the province, Rs140.62 billion was proposed for law and order,12% higher than the previous year.

The finance minister started the speech by mentioning non-payments from the federal government.

After the merger of tribal areas with KP, he said, the provincial government should get Rs262 billion annually in the National Finance Commission (NFC) awards. “However, the province has received only Rs123 billion so far, and facing a deficit of Rs139 billion.”

Unfulfilled promises: Windfall levy on oil and its impact on KP

He said under AGN Qazi formula approved by the Council of Common Interest, around Rs1800 billion outstanding amount is pending towards the federal government.

Afridi mentioned that according to the Petroleum Policy 2012 of the federal government, the oil exploration and production companies are bound to pay $40 per barrel in windfall levy, which are equally distributed between the federal and provincial governments. “However, since 2013 till now, the federal government owes Rs46.82 billion to the KP government.”

The minister said the province significantly increased its revenue in recent years.

“For the next financial year, we have made a revenue mobilisation plan with a target of Rs93.50 billion.

“Our government is focusing more on expanding the tax net than increasing taxes.”

He informed that the provincial cabinet that approved the budget proposed reforms in the sales, property, and tobacco taxes.

Under the Khyber Pakhtunkhwa Revenue Authority (KPRA), some ease was proposed in the different categories of the Sales Tax on Services, the finance czar said.

“On hotels, the sales tax has been set at 6% and the use of Restaurant Invoice Management System (RIMS) has been made mandatory at all the hotels in the province.

“The cabinet has proposed a fixed sales tax rate on wedding halls, while a significant relief is being given in the property tax.”

Afridi said the provincial government proposed to reduce the tax amount per kanal for factories from Rs13,600 to Rs10,000.

“The tax on commercial property which is currently 16% of the monthly rent is to be reduced to 10% and 5% for private hospitals, medical stores, and other businesses related to the health sector,” he said.

The KP government proposed to increase the tobacco development cess to increase income on the production of tobacco. It informed that the provincial tax on the transfer of properties was to be reduced from 6.5% to 3.5%.

The finance minister said that 5,000 new houses would be constructed under the Ehsas Own House Programme for which Rs3 billion has been allocated.

For wheat subsidy, over Rs26 billion has been allotted by the KP government in the budget for the financial year 2025.

Besides allocation of Rs14.69 billion for livestock, the KP government also proposed Rs14.05 billion for forestry with launching of billion trees plus project.

Similarly, Rs7.53 billion for industries and Rs9.66 billion has been allotted for tourism.

The budget of Social Welfare Department was proposed to increase to Rs8.11 billion, 6% higher than the previous year.