Punjab proposes no new taxes in record PKR 1.2 trillion development budget

Pakistan's Punjab province will not impose any new taxes in its upcoming budget, sources revealed Wednesday, just three days after Pakistan's federal government introduced multiple new levies including taxes on fuel, solar panels and online purchases.

The decision comes as Punjab prepares to present a record PKR 1.2 trillion ($4.3 billion) development budget Friday, according to government sources who spoke on condition of anonymity because the budget has not been officially announced.

The no-tax pledge sets up a contrast with the federal government's approach. On Tuesday, Islamabad introduced a carbon levy on fuel, an 18% tax on imported solar panels, and new taxes on purchases from international e-commerce platforms.

The federal budget also reduced grants to provinces from PKR 1,777 billion to PKR 1,619 billion, putting additional pressure on provincial finances.

Punjab's development spending plan represents one of the largest provincial budgets in Pakistan's history, with PKR 1,076 billion coming from local funds and PKR 124.3 billion from foreign funding, sources said.

Infrastructure investment dominates spending

The bulk of Punjab's development allocation will target infrastructure projects, with PKR 536 billion earmarked for 1,412 ongoing development schemes and PKR 457 billion proposed for new initiatives.

The province plans to allocate PKR 100 billion for a local road construction program and PKR 207 billion for 32 major development programs. An additional PKR 4.34 billion will fund the Punjab Safe Water Authority's operations.

Education and healthcare infrastructure will receive significant investment, with PKR 3 billion designated for installing solar power systems in government colleges and PKR 1 billion for converting rural hospitals to solar energy. Another PKR 3.04 billion will fund solar conversions for district courts and high court benches.

The emphasis on solar energy comes as the federal government imposed an 18% tax on imported solar panels, potentially increasing costs for these provincial projects.

Agriculture and business programs expanded

Punjab will significantly boost support for farmers and small businesses, with PKR 10 billion allocated for a tractor distribution program and PKR 750 million annually for a three-year mango production enhancement program.

The province plans to establish a Trade and Investment House with PKR 500 million in funding and will launch an PKR 89 billion business finance initiative aimed at supporting small enterprises. An additional PKR 750 million will expand Punjab Business Facilitation Centers across the province.

Environmental programs will receive PKR 500 million annually for the Punjab Clean Air Program, funded by the World Bank, and PKR 5.5 billion for Phase Two of the Punjab Green Tractor Program.

The budget also includes PKR 9 billion for a school meal program covering eight districts and establishes an Electric Power Regulatory Authority with PKR 30 million in initial funding.

Punjab's Finance Minister Mujtaba Shujaur Rehman is scheduled to present the provincial budget to the Punjab Assembly next Monday.