In provincial budgets for fiscal year 2016-17, allocations for health, education and other universal entitlements may look satisfactory (sic) to budget-makers within their fiscal restraints, but the real issue of empowering masses through local governments remains unattended. All provinces not only lack the capacity for quality utilisation of funds but also cannot ensure timely spending. The fundamental structural changes required to achieve these goals is the real formidable task, which no province is ready to undertake.

Punjab Finance Minister, Dr. Ayesha Ghous Pasha, in her budget speech on June 13, 2016, proudly claimed that the Punjab government would spend "57 per cent of the budget on five major sectors of education, health, agriculture, clean drinking water, and law and order for which a hefty amount of Rs804 billion has been allocated." She mentioned that "education sector development allocation would be 47 per cent up, school education 71 per cent, health 62 per cent, clean drinking water 88 per cent, law and order 48 per cent, and 47 per cent each agriculture, irrigation, livestock, forests, fisheries and food."

Dr. Ayesha suggested nothing for giving fiscal powers to local governments that was an important requirement under Article 140A of Constitution of Pakistan. Will allocation of Rs804 billion bring positive changes to the life of masses? Is there a mechanism ensuring fair distribution of funds in the entire province of Punjab? Is there any institutional framework to check wastages, overruns and leakages? We hope Dr. Ayesha must have examined the Indian model where Punjab Finance Commission, set up every five years, analyses state’s financial performance every year on holistic basis. This mechanism is completely missing in our part of Punjab and one-man show is eulogised, even by professionals like Dr. Ayesha.

The champions of right of provinces at the time of Eighteenth Constitutional Amendment failed to take cognizance of the fact that the federal government has been encroaching upon the rights of the provinces by levying presumptive taxes on services camouflaged under the Income Tax Ordinance, 2001, sales tax on gas, electricity and telephone services and excise duty on a number of services.

Federal injustice in tax matters has denied the provinces their constitutional rights besides crippling them financially -- even the last NFC Award could not solve the issue of dependence on Islamabad -- placing heavy reliance on the centre and contributing only 8 per cent of tax revenues towards national budget. The provinces under Eighteenth Constitutional Amendment should have been given the exclusive right to levy indirect taxes on goods within their respective physical boundaries as was the case before independence. However, none of the provinces raised this vital point!

The performance of Punjab and other provinces in the case of collection of sales tax on services completely belies the impression created by the federal government that "they lack capacity to generate taxes." Their collection is far more than what Federal Board of Revenue used to collect on their behalf! If sales tax on goods was given back to provinces, they would have performed much better as experience of handling sales tax on services shows. However, the performance of Punjab in collecting agricultural income tax is extremely poor -- Dr. Ayesha has admitted that "the province expects to achieve only 60 per cent of the target of Rs2.3 billion set for tax on agriculture income this year and that the target for the next fiscal year remains unchanged".

Collection of Rs1.38 billion under this head is highly lamentable when actual potential is Rs75 billion. This is a common issue both at federal and provincial level arising from absence of the will to collect income tax from the rich -- the meagre collection of agricultural income tax despite the existence of relevant provincial statutes levying tax on agricultural income should be a serious cause for concern for all. It is imperative that the right to levy tax on income, including agricultural income, should be with the federal government. In return, the federal government should hand over sales tax on goods to the provinces.

The weakest aspect of democratic dispensation in Pakistan is denying of self-rule to people at the grass root level -- the local government. Municipalities in true democratic countries enjoy complete fiscal independence through their elected residents. These municipalities have the right to levy municipal tax in accordance with their laws. Local authorities perform the functions that they are responsible for by virtue of their autonomy and as required by law. This type of governance is totally missing in Punjab and elsewhere and, therefore, budget numbers become irrelevant to common people.

Proper utilisation of funds allocated by the government of Punjab for education, healthcare and social welfare services should have been with local governments. There is no desire on the part of Khadim-e-Aala to empower local governments making them responsible for managing their residents’ educational needs, housing, management and maintenance of their living environment (i.e. roads, streets, water supply and sewerage etc), as well as land-use planning and functional municipal structures, and free-time, recreation needs like play grounds, sport complexes, swimming pools etc.

Fiscal decentralisation and municipal self rule should essentially be linked with a social policy based on the principle of universal entitlements for all residents in terms of access to social benefits and social services. The principle of universal entitlements, as practiced in Finland and elsewhere through municipalities, is worth studying and following by us. It seeks to prevent the formation of inequalities and the foundation of the poor as a separate social group, whereas residualism/marginalism takes the form assisting the poor and the needy, and thus implicitly defining them as certain types of social groups.

In Pakistan through innumerable charities we practice this and thus collectively there is no socio-economic justice for all. However, the system of universal entitlements in Finland provides "income support and housing allowance etc to those most in need, and therefore selective positive discrimination is being practised. Similarly, in terms of social services, the national Social Insurance Institution remits some of the costs from service fees which nevertheless first have to be purchased by the patient. Therefore, in practice the principle of universalism means that a relatively larger share of social benefits and services function according to this principle when compared with the situation in other countries" -- The Local Government System in Finland.

Our parliamentarians are not even aware of great innovation of ‘Local Self Government in Finland’ what to speak of following the same to fulfill the real spirit of Article 140A of the Constitution. In fact, the ruling classes do not want to empower people through self-governance. They want to enjoy total control over resources. The local governments can only be made meaningful if they are entitled, within national economic policy, to have adequate financial resources of their own, of which they may dispose freely within the framework of their powers for public welfare.

People-empowering self-rule is still a far cry in Pakistan. If we have to move towards social democracy and egalitarian Pakistan, the federal and provincial governments would have to ensure that local governments have the necessary resources and capacity to provide universal entitlements to all residents, equally and promptly. Finland has a well-functioning relationship between the state and the local authorities, as well as a state-subsidy system which ensures municipal resources and residents’ equal access to services.

The Punjab government has provided nothing in budget 2016-17 for these goals. The same is the case with other provinces. Providing social benefits and equal access to services as public policy is not on their agenda. Punjab may have abundant resources (hope to receive over one trillion rupees from NFC Award alone in the coming year whereas total outlay of budget is Rs1681 billion!), the majority will remain poor for lack of what has been narrated above. So long as political power vests with the privileged classes instead of common people, nothing worthwhile will happen on the economic front.

Punjab Budget 2016-17 suggests nothing to empower people through local self-government -- it is merely a number game just as the federal budget. The most disturbing fact of the Punjab budget is accumulation of total debt of Rs533.1 billion -- domestic debt Rs17.1 billion and foreign debt Rs516 billion -- which nobody has taken note of. The heavy foreign debt and its utilisation must be explained. Is it for investment in some income-yielding projects? If not then its impact will be worrisome. So the picture is not as rosy as painted by Dr Ayesha as far as fiscal management is concerned.