Pakistan's top revenue-generating Sindh province unveils $12.4 billion budget with major tax cuts
KARACHI: Pakistan's southern Sindh province on Friday proposed abolishing five taxes as it presented a Rs3.45 trillion ($12.41 billion) new budget for fiscal year 2025-26 to simplify taxation and alleviate financial pressure on people and small businesses.
Friday also saw Pakistan's northwestern Khyber Pakhtunkhwa (KP) province announcing a surplus budget of Rs2,119 billion ($7.63 billion) for next year, without proposing any new taxes. The province allocated significant financial resources for the militancy-hit tribal districts and social welfare programs, according to the budget document.
SINDH
Sindh's budget, which carries a deficit of Rs38.46 billion ($138.35 million), includes plans to eliminate professional tax, cotton fee and entertainment duty among other levies as part of broader reforms to support salaried individuals, small businesses, and cultural industries.
'I would like to share some important changes being planned to make our tax system simpler and to reduce the financial burden on both individuals and businesses,' Chief Minister Murad Ali Shah said while presenting the budget in the provincial assembly.
Sindh generates most of Pakistan's revenues, more than 60 percent, and is the second most populous province ruled by Pakistan People's Party of President Asif Ali Zardari, a coalition partner of Pakistan Muslim League-Nawaz party which leads the federal government.
Pakistan remains under a $7 billion International Monetary Fund (IMF) loan program approved last year and the Washington-based lender wants Islamabad to broaden its tax base by taxing incomes from agriculture, retail and real estate sectors at the provincial level.
The two provinces announced their new fiscal plans days after Pakistan's federal government announced its FY26 budget targeting 4.2 percent economic growth, while aiming to arrest fiscal deficit at 3.9 percent of the GDP.
In Sindh, the province's total revenue receipts are projected at Rs3.41 trillion ($12.27 billion) for FY2025-26, up 11.6 percent from the current fiscal year ending June. Transfers from the federal divisible pool, which account for 75 percent of revenue, are expected to rise 10.2 percent to Rs1.93 trillion ($6.94 billion). With additional grants and straight transfers, total federal receipts are estimated at Rs2.10 trillion ($7.55 billion).
Current Revenue Expenditure (CRE) has been set at Rs2.15 trillion ($7.73 billion), a 12.4 percent increase from the prior year, driven by higher salaries, pensions, and grants to non-financial institutions.
Allocations for key sectors have seen marked increases. The education budget has risen to Rs523.73 billion ($1.88 billion) – a 12.4 percent hike – with major investments in primary and secondary education. New initiatives include hiring 4,400 staff, opening four community colleges, and funding for 34,100 primary schools through cost centers.
The health sector will receive Rs326.5 billion ($1.17 billion), up 8 percent, including Rs19 billion ($68.35 million) for the Sindh Institute of Urology & Transplantation (SIUT) and Rs10 billion ($35.97 million) for a new hospital in Larkana.
Enhanced ambulance and mobile diagnostic services are also planned.
Grants-in-aid total Rs702 billion ($2.53 billion), reflecting allocations for hospitals, universities, and development bodies. A Rs520 billion ($1.87 billion) Annual Development Program (ADP) focuses on 475 new schemes targeting flood recovery, renewable energy, and underserved regions.
Karachi, the provincial capital of Sindh, will see major upgrades in transport and infrastructure. Fifty electric buses will launch this year, with 100 more expected by August. Bus Rapid Transit (BRT) Yellow Line is nearing completion, and the Red Line has passed the halfway mark.
The Karachi Safe City initiative will expand CCTV coverage using artificial intelligence, while blockchain-based land records, a KPI monitoring dashboard, and digital birth registration aim to enhance governance.
In rural areas, Rs20 billion ($71.95 million) has been allocated for pro-poor initiatives, while the new Benazir Hari Card will support 200,000 farmers. The Sindh Cooperative Bank is being explored to provide interest-free loans to progressive farmers.
KHYBER PAKHTUNKHWA
Presenting the new budget, Khyber Pakhtunkhwa's Finance Minister Aftab Alam said the province achieved a Rs100 billion ($359.71 million) surplus in the outgoing fiscal year despite receiving Rs90 billion ($323.74 million) less in funds from the federal government.
The province is ruled by jailed former Prime Minister Imran Khan's Pakistan Tehreek-e-Insaf (PTI) party, which is in opposition at the federal level.
'Against all odds and skepticism, we not only met our budget targets but also ensured timely debt repayments of Rs49 billion [$176.26 million],' Alam said.
He added that KP's own non-tax revenues rose by 74 percent this year, while the KP Revenue Authority collected Rs41.37 billion ($148.79 million) in the first 10 months of the outgoing fiscal year.
The province has set a tax revenue target of Rs83.5 billion ($300 million) and a non-tax revenue target of Rs45.5 billion ($163.71 million) for the next fiscal year, aiming to widen the tax net rather than impose new levies.
Federal transfers, including Rs1,147.91 billion ($4.13 billion) from tax revenues and Rs58.15 billion ($209.17 million) in oil windfall levy, are expected to form the bulk of receipts.
The tribal districts are set to receive Rs292.34 billion ($1.05 billion), including Rs50 billion ($179.85 million) under an accelerated implementation program and Rs39 billion ($140.28 million) for development.
Key initiatives include the expansion of the Sehat Card Plus with life insurance coverage, recruitment of 16,000 teachers, and establishment of new degree colleges.
The province's police force will receive Rs693.7 million ($2.49 million) for modern arms and Rs1.22 billion ($4.39 million) for vehicles.
Hashtags
Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Arab News
3 hours ago
- Arab News
Pakistan to nominate Trump for Nobel Peace Prize
ISLAMABAD: Pakistan said on Saturday it would recommend US President Donald Trump for the Nobel Peace Prize, an accolade that he has said he craves, for his work in helping to resolve the recent conflict between India and Pakistan. Some analysts in Pakistan said the move might persuade Trump to think again about potentially joining Israel in striking Iran's nuclear facilities. Pakistan has condemned Israel's action as a violation of international law and a threat to regional stability. In May, a surprise announcement by Trump of a ceasefire brought an abrupt end to a four-day conflict between nuclear-armed foes India and Pakistan. Trump has since repeatedly said that he averted a nuclear war, saved millions of lives, and grumbled that he got no credit for it. Pakistan agrees that US diplomatic intervention ended the fighting, but India says it was a bilateral agreement between the two militaries. 'President Trump demonstrated great strategic foresight and stellar statesmanship through robust diplomatic engagement with both Islamabad and New Delhi, which de-escalated a rapidly deteriorating situation,' Pakistan said. 'This intervention stands as a testament to his role as a genuine peacemaker.' Governments can nominate people for the Nobel Peace Prize. There was no immediate response from Washington. A spokesperson for the Indian government did not respond to a request for comment. Trump has repeatedly said that he's willing to mediate between India and Pakistan over the disputed Kashmir region, their main source of enmity. Islamabad, which has long called for international attention to Kashmir, is delighted. But his stance has upended US policy in South Asia, which had favored India as a counterweight to China, and put in question previously close relations between Trump and Indian Prime Minister Narendra Modi. In a social media post on Friday, Trump gave a long list of conflicts he said he had resolved, including India and Pakistan and the Abraham accords in his first term between Israel and some Muslim-majority countries. He added: 'I won't get a Nobel Peace Prize no matter what I do.' Pakistan's move to nominate Trump came in the same week its army chief, Field Marshal Asim Munir, met the US leader for lunch. It was the first time that a Pakistani military leader had been invited to the White House when a civilian government was in place in Islamabad. Trump's planned meeting with Modi at the G7 summit in Canada last week did not take place after the US president left early, but the two later spoke by phone, in which Modi said 'India does not and will never accept mediation' in its dispute with Pakistan, according to the Indian government. Mushahid Hussain, a former chair of the Senate Defense Committee in Pakistan's parliament, suggested nominating Trump for the peace prize was justified. 'Trump is good for Pakistan,' he said. 'If this panders to Trump's ego, so be it. All the European leaders have been sucking up to him big time.' But the move was not universally applauded in Pakistan, where Trump's support for Israel's war in Gaza has inflamed passions. 'Israel's sugar daddy in Gaza and cheerleader of its attacks on Iran isn't a candidate for any prize,' said Talat Hussain, a prominent Pakistani television political talk show host, in a post on X. 'And what if he starts to kiss Modi on both cheeks again after a few months?'
Arab News
3 hours ago
- Arab News
India says it will never restore Indus Waters Treaty with Pakistan
NEW DELHI: India will never restore the Indus Waters Treaty with Islamabad and the water flowing to Pakistan will be diverted for internal use, Home Minister Amit Shah said in an interview with Times of India on Saturday. India put into 'abeyance' its participation in the 1960 treaty, which governs the usage of the Indus river system, after 26 civilians in Indian-administered Kashmir were killed in what Delhi described as an act of terror. The treaty had guaranteed water access for 80 percent of Pakistan's farms through three rivers originating in India. Pakistan has denied involvement in the incident, but the accord remains dormant despite a ceasefire agreed upon by the two nuclear-armed neighbors last month following their worst fighting in decades. 'No, it will never be restored,' Shah told the daily. 'We will take water that was flowing to Pakistan to Rajasthan by constructing a canal. Pakistan will be starved of water that it has been getting unjustifiably,' Shah said, referring to the northwestern Indian state. The latest comments from Shah, the most powerful cabinet minister in Prime Minister Narendra Modi's cabinet, have dimmed Islamabad's hopes for negotiations on the treaty in the near term. Last month, Reuters reported that India plans to dramatically increase the water it draws from a major river that feeds Pakistani farms downstream, as part of retaliatory action. Pakistan's foreign ministry did not immediately respond to Reuters' request for comments. But it has said in the past that the treaty has no provision for one side to unilaterally pull back and that any blocking of river water flowing to Pakistan will be considered 'an act of war.' Islamabad is also exploring a legal challenge to India's decision to hold the treaty in abeyance under international law.
Arab News
4 hours ago
- Arab News
Israel-Tehran conflict cripples border trade between Pakistan and Iran
QUETTA: The ongoing conflict between Israel and Iran has crippled border trade between Pakistan and Iran, transporters and traders said this week, with markets closed and dozens of trucks stranded on the Pakistani side of the border. Pakistan shares a 959-kilometer border with Iran in its southwest and the trade volume between the two countries stood at $2.8 billion in the last fiscal year that ended in June 2024, according to Pakistani state media. In Feb., the two neighbors signed an agreement to take the bilateral trade volume to $10 billion, but tensions between Iran and Israel prompted Pakistan to suspend operations at the Taftan border crossing in Balochistan on June 15, mirroring the Iranian side's restrictions following Israeli airstrikes. 'We've been stuck here in Taftan for four to five days, with six to seven vehicles,' Syed Khalil Ahmed, a local transporter, told Reuters on Friday. 'We're waiting for it to reopen so we can load our goods. The market is closed, and there's a shortage of food and drinks.' Israel began attacking Iran on June 13, saying its longtime enemy was on the verge of developing nuclear weapons. Iran, which says its nuclear program is only for peaceful purposes, retaliated with missile and drone strikes on Israel. The Taftan border, a vital trade artery which typically handles daily exchanges in fuel, food and household goods, is now left paralyzed. Local traders said 90 percent of goods in Taftan typically come from Iran. 'With the border closed, no goods are arriving [from Iran] ... Local traders with Pakistani passports can't enter Iran, and Iranian passport holders can only reach the border and return,' said Hajji Shaukat Ali, an importer of liquefied petroleum gas (LPG). 'This is hurting local businesses and traders. For us, as major LPG gas traders, some of our vehicles are stuck en route and won't be able to reach us now.' Ahmed said they were losing approximately Rs20,000 ($70) per truck daily while facing critical shortages of essential supplies. 'We're managing with what we have, but it's tough,' he added.
