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August 28, 2018

Jacking up revenue collection in KP: Posting of competent ministers, secretaries to four departments must


August 28, 2018

PESHAWAR: In the highly anticipated reshuffle in bureaucracy, the posting of capable secretaries and ministers for at least four departments is seen inevitable to pull Khyber Pakhtunkhwa out of the lingering financial underperformance in revenue collection that left the province unable to meet its pressing fiscal needs.

Apart from the chief secretary Naveed Kamran Baloch and few high-ranking officials, almost the entire bureaucracy remained unchanged even during the recent election.

For the new government of the Pakistan Tehreek-e-Insaf (PTI) in the province though, it is imperative to shake the bureaucracy at the outset of its tenure for better governance. The new provincial government of the PTI, which also led the preceding coalition government in the province, has already retained some bureaucrats and even recalled few others to pre-election positions.

However, a senior bureaucrat, who talked to The News on the matter, said among other governance issues the new provincial government would face the serious issue of funds scarcity to meet its financial obligations. Particularly, he pointed out, the province's own revenue collection that remained behind the target will continue to be a major concern if the new setup did not apply acumen and good judgement while placing secretaries for some of the key departments.

The Finance Department document shows that the province is facing an acute shortage of revenue and it is still awaiting the receipt of Rs22.5 billion Net Hydel Profit (NHP) arrears. However, the major worry of KP is its own revenue receipts that remained below the target over the last financial year (2017-18).

According to the Pakistan Economic Survey, the tax to GDP ratio of the federal government is 12.5 percent, while that of Khyber Pakhtunkhwa is just one percent. The province at the rate of one percent collected around Rs30 billion by June 30, 2018. "What if we take it to three percent? It would jump to Rs90 billion then," an administrative secretary posed the query, while talking to The News. He requested not to be identified, for he is serving on one of the key departments as secretary.

The province has no economic policy at the moment and its major revenue earning departments, and those supposed to carry out financial management work in isolation in absence of appropriate coordination. The province has industrial and mineral policies but it lacks an inclusive economic policy to forge its growth policy in one workable course of action.

To cope with the anomaly of the funds' paucity, the present government will have to assign the portfolios of these departments to ministers having relevant background knowledge. It will also have to post competent bureaucrats as secretaries of the departments for the performance, the secretary said.

He said that these departments included Finance, which serves as a hub in terms of the financial management and financial discipline of the province. It also challenges the recovery targets of the revenue collecting and generating body in the province that leads to improvement in the revenue collection.

Another department, which collects the major chunk of taxes, including a tax on services and urban immovable property tax and other revenues, is the Excise Department. "However, recovery by the department remains abysmal," the official pointed out. An active team of secretary and minister is essential to run the department in the next few years, he added.

"We can raise our collection to Rs20 billion annually if the tax on services and urban immovable property tax collection could be improved, which is very much doable," he maintained.

The senior bureaucrat said that Mines and Mineral Development Department also needed a competent minister and secretary duo. In mineral sector, the fees and levies are collected on the raw material, while for the economic growth the government will have to levy the same on the finished products for which a mechanism would have to be worked out.

Cement production is the strength of the province where seven plants are operating while 11 others are in the pipeline and shortly KP will have 18 plants.

"However, there are a lot of problems in collecting levies on the inputs from these plants. There are slippages and accounting and mentoring problems," he said. The collections from the sector may go up from Rs4 to Rs7 billion if the tax on output or finished product (cement bag) is ensured, the officer argued.

He noted that the Energy and Power sector is of great importance and a good team of competent secretary and minister would not only resolve the issue of payment of net hydel profit on Kazi Committee Methodology, but will also ensure the recovery of arrears on account of electricity provided to the national grid from Pehur Power project and resolve the issue of Ranolia which was commissioned two years ago but has yet to be linked to the national grid.

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