Through a working paper prepared by the KMC and the same forwarded to Chief Minister (CM) Sindh Syed Qaim Ali Shah, with detailed statistics of financial position the KMC has informed the CM that the share of KMC was Rs 525.600 million per month for years. But it has been reduced to Rs 500.00 million per month by the Finance Department of the Government of Sindh (GOS) since July 2012.
As the financial position of KMC is quite fragile it is requested that the amount of grant-in-aid may kindly be continued to be released to the KMC during the current financial year 2012-2013 with an addition of 20 percent enhancing it to Rs 630.720 million per month to meet the expenditure on account of increase in salaries, pensions to employees announced by the Government, it said.
The GoS has been requested that the grant in aid of Rs 630.720 million may be released for the month of November 2012 for the disbursement of salary and pension along with an amount of Rs 522.880 million on account of short release during the months of July to October 2012.
Sharing the reasons of the financial woes of KMC, the working paper claimed that since long the KMC has been pleading for the logical rationalisation /enhancement of its legitimate share of Matching Grant in lieu of Octroi. Since the discontinuation of Octroi and Zila Tax (OZT) on the directives of federal government, local councils (since 14-08-2001 local governments) predominately rely on federal provincial transfers from the additional 2.5 percent GST levied with the objective of settling the loss of OZT. The local governments depend on the inherited taxes and the grant they get in lieu of foregone Octroi revenue. The OZT together accounted for more than 70 percent revenues of local councils. The OZT was abolished on the agreement that the federal government would compensate the local councils for their losses through an additional 2.5 percent GST.
Furthermore, the following details will show the pre-devolution and current position of the 2.5 percent GST transferred/being transferred by federal government to provincial government and short release of due shares to Karachi.
According to it, the share of KARACHI as on 1-7-1999 was Rs 3,705.00 million or 57 percent of Benchmark of Rs 6,500.000 million. The 57 percent share was being distributed between KMC / DMC as per Rs 1,222.650 million and Rs 2,482.350 million respectively with respective allocated share of 33 percent and 67 percent. Due share as on today, the share of Karachi (57 percent) was Rs 21359.610 million against the Benchmark of Rs, 37,473.000 million (Budgeted allocation of Provincial Government for the financial year 2012-2013)
It is shared between KMC /TMAs with Rs 11,106.998 million (52 percent) and Rs 10,252.612 million (48 percent) respectively. However, the per year share released to KMC and TMAs (18) was Rs 3923.496 million and Rs 8612.928 million respectively with respective shortage/short release of 65 percent and 16 percent. "It is not understood how the share of DMC's and KMC are being assessed with different standards," it said.
The Government has increased 'Salaries/Pension of Government employee's upto 175 percent during the last thirteen year (13) against which the OZT share was increased only by 55 percent.
As a matter of fact it is immaterial now what the historical share was fixed by the FF0. The share is to be determined on the basis of the current income under the 2.5 percent additional GST, which comes to Rs 37,473.000 million. Regarding the KDA's financial issue, it was stated that the expenditure on salaries to the staff of the defunct KDA used to be met out of its own resources from the sale of land under various housing schemes. The last such scheme was Scheme-33 launched in 1986. The financial crunch emerged when the MDA and LDA were established under the devolution plan and the schemes were transferred from the defunct KDA to MDA in 1996 including scheme 33.
Like other departments of the Provincial Government, the defunct KDA was also devolved. Accordingly the salary of the employees of the defunct KDA was also allowed by the GOS through the SLTS in 2007-2008 which was subsequently stopped without assigning any reason. Resultantly the salary of the employees of the defunct KDA is also again charged against the OZT share which is already too meager to meet the expenditure of salary of defunct KMC employees.
The actual requirement to meet salaries and non-salaries expenditure of the KDA amounts to Rs 250.000 million per month. Under the circumstances keeping in view the requirement of the KMC and KDA to meet the expenditure of salaries/pension of the KMC and KDA officer/officials with increased cost of other non-development expenditure it will be appropriate to enhance the share OZT to Rs 1175.584 million per month and the same would be met from the budget allocation "Transfer (into government) to TMAs (Tehsil, Town and Union) 014103" for the current fiscal year.