The Sindh government will spend 70% of its budget on running the government—as in itself.

That money will go to paying salaries and running its offices, the budget for 2018-2019 shows.

The budget is how much money the government will earn and where and how it will spend that money in a year.

This year, the government plans to spend Rs1.14 trillion. This includes spending Rs800 billion on “current expenditures” (read: salaries and running its offices). And by the way, in May, the Sindh government increased salaries by 10%.

This leaves less money for development, which is being cut. Sindh will spend Rs244 billion on development programs, which is 30% of its budget.

That is schools, clinics, roads.

“I want to mention that our provincial development portfolio now faces an allocation cut of Rs24.00 billion,” Chief Minister Syed Murad Ali Shah said when he presented the budget in the Sindh Assembly Monday morning (Sept 17).

He called it an “unpleasant decision” to cut development and blamed the federal government (Islamabad), saying it didn’t give them the money they had estimated.

(The federal transfers are the money each province receives from the federal government under the National Finance Commission Award. For Sindh, it becomes 73% of the province’s kitty.)

A cut in development means the government will spend less on education, health and infrastructure this year as it also faces a loss of Rs20.4 billion.

The CM didn’t announce any new taxes but said the federal government should allow provinces to collect sales tax on goods, which will increase its earning. Right now, the provinces can collect sales tax on services only but the sales tax on goods goes to the federal government.

“I would urge the federal government that the sales tax on goods may also be devolved to the provinces,” Shah said. “I can assure with confidence that we can handle it very effectively as well.”

The CM’s optimism comes from the performance of the Sindh Revenue Board, which he frequently boasts about.

“The [board] is now the largest authority to collect sales tax on services in Pakistan and it has registered a 25% average growth in the collection of sales tax in successive years since its inception [after the 2009 NFC Award],” he said.

A deeper look at the tax collection figures shows, however, that Murad Ali Shah’s government heavily relies on indirect taxes such as the one you pay for a meal at a restaurant. These taxes are “regressive” in the sense that they are levied on services and not on income.

The 2018-2019 estimates say that tax on income (direct tax) is less than 10% of what Sindh earns in taxes.

Take for example, tax on agriculture income. For this financial year, the Sindh government expects to earn Rs2 billion in agriculture income tax, which is not even 1% of its revenue.