New revenue increasing strategy employed by Punjab Government
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Amidst financial challenges faced by the Punjab government, the interim provincial cabinet has given the green light to a "Revenue Mobilization Strategy and Plan." This plan spans three years, spanning from the current fiscal year 2023/24 to 2025/26.
The Secretary of the Punjab Finance Department recently briefed the interim cabinet, led by the interim Chief Minister of Punjab, Syed Mohsin Raza Naqvi, regarding the province's financial status.
As per official documents cabinet members were apprised that the provincial government must provide essential services to its growing population while simultaneously making vital public investments to bolster economic growth, productivity, and employment. To meet these obligations, the government must augment its available resources.
The Secretary explained that Punjab generates revenue in three primary ways:
1. Revenue share from the Federal Divisible Pool (FDP).
2. Revenue from Provincial Taxes.
3. Revenue from Provincial Non-Tax Sources.
Furthermore, the cabinet was informed that in the fiscal year 2021-2022, Punjab collected taxes amounting to Rs286 billion, which represented 13.1 percent of the province's total revenue for that year (General Revenue Receipts) and 0.78 percent of the provincial Gross Domestic Product (GDP), estimated at 55% of Pakistan's GDP.
The interim cabinet was also alerted to the need for the provincial government to increase its revenues from provincial taxes, both in terms of its total revenue and as a percentage of its GDP.
An official emphasized, "The government must enhance its tax policy and administration to achieve higher growth in Own-Source Tax Revenue (OSTR) relative to the growth in nominal GDP, thereby increasing the ratio of Own-Source Tax Revenue to GDP."
