Finance Ministry has yet to communicate the revised estimates (REs) of tax collections in the divisible pool for the current year, disabling provinces from making appropriate adjustment in their development and current expenditures accordingly. This was revealed by senior officials of the Sindh government to Business Recorder on condition of anonymity.
They further revealed that if there is any shortfall in revenue collection in divisible pool taxes, the provinces are communicated about the revised projection by the third quarter or by end of third quarter, however, this year provinces have not yet been informed about the revised estimates of tax collections.
There is no dispute on the transfers made to Sindh however the actual issue is that these transfers are considerably lower than the revenue commitment made to the province at the time of the budget, officials added.
Provinces rely on the Federal Board of Revenue (FBR) projections at the start of the year and prepare their budgets on the basis of these projections. In the event of any decrease in collections the development budget becomes the first victim with very serious consequences for the province in terms of growth and employment opportunities.
To a question with regard to higher share of Punjab government in transfer from divisible pool, they added that it is higher because the population in Punjab rose at a faster pace than in Sindh and population is still a major benchmark for revenue distribution from divisible pool taxes.
They further maintained that Sindh is facing serious problems in implementing development projects announced in the budget for the current fiscal year owing to lower transfer of resources from the divisible pool.
If there was any shortfall in revenue collection in the divisible pool, the provinces should have been informed well in time with revised estimates to enable them to make adjustment in their annual expenditure.
The finance ministry, instead of issuing a clarification with regard to transfers to the provinces, should have communicated to them through revised estimates of revenue collection for the current fiscal year, the officials maintained.