Despite being the largest province by landmass and endowed with natural resources, Balochistan continues to exhibit one of the weakest performances in own-source revenue (OSR) generation among Pakistan’s federating units. While the province depends heavily on federal transfers through the National Finance Commission (NFC), the untapped potential of its tax and non-tax revenue remains a significant yet overlooked opportunity for sustainable fiscal development.
A Narrow Tax Base and Low Collection
Balochistan’s OSR is dominated by a handful of provincial taxes and fees, most of which contribute marginally to the provincial exchequer. According to the Balochistan Budget Documents (FY 2022–23), the total OSR stood at PKR 14.7 billion, a mere 6.3% of the province’s total receipts. This figure reflects both structural constraints and weak institutional mechanisms.
The bulk of tax revenues is drawn from:
- Urban Immovable Property Tax (UIPT)
- Motor Vehicle Tax
- Excise Duty on Alcohol (minor in Balochistan)
- Land Revenue and Stamp Duty
These instruments are constrained by outdated valuation methods, weak coverage, and poor enforcement. For instance, the property tax remains largely confined to select urban pockets and uses obsolete rental values rather than current market-based assessments. Likewise, the Land Revenue system still follows colonial-era practices, with minimal digitization or integration into modern GIS-based property records.
Non-Tax Revenue: Untapped Goldmine
On the non-tax side, Balochistan has immense potential in sectors like mining, fisheries, forests, and water usage fees. However, weak regulatory oversight, leakages in royalty collection, and informal sector dominance prevent the province from fully capturing this value.
In 2022–23, non-tax revenue contributed around PKR 8.3 billion, with significant shares from:
- Royalties on minerals and oil & gas
- License fees for mining and fisheries
- Irrigation service charges
Yet, even these numbers understate the potential. Balochistan produces approximately 40% of Pakistan’s natural gas, and hosts a wide range of minerals including coal, copper, gold, and marble. Despite this, poor monitoring, under-invoicing, and lack of transparency in lease agreements reduce the fiscal gains from these resources.
Opportunities for Revenue Expansion
A three-pronged strategy could help unlock Balochistan’s revenue potential:
- Property Tax Reform
Modernizing UIPT through geo-mapping, digitized valuation rolls, and expanding coverage beyond Quetta and a few towns can enhance collections. Integrating with NADRA and land records will ensure ownership-based taxation and minimize evasion. - Mining and Natural Resource Royalties
Revising outdated concession agreements, ensuring digital audits, and aligning royalty rates with market benchmarks will not only improve revenue but also promote compliance. Introduction of transparent bidding processes for mining leases is another low-hanging fruit. - Expanding the Non-Tax Revenue Net
Introducing reasonable fees for water usage in commercial agriculture, regulating groundwater extraction, and imposing environmental levies on extractive industries could generate both revenue and ecological benefits. Similarly, fisheries licenses in coastal areas remain underpriced and under-enforced.
Capacity and Governance Bottlenecks
Perhaps the biggest hurdle remains administrative capacity. The Balochistan Revenue Authority (BRA), while operational, suffers from human resource shortages, limited IT integration, and a narrow functional mandate. There’s also a need to build coordination between the Board of Revenue, Excise & Taxation Department, and BRA to harmonize databases, reduce overlaps, and improve compliance.
Furthermore, public trust in the government’s ability to deliver services limits voluntary compliance. Citizens are unlikely to pay taxes unless they perceive tangible returns in health, education, and infrastructure.
Looking Ahead
The challenge of low OSR in Balochistan is not unique—but the stakes are arguably higher. With rising development needs, natural resource constraints, and growing fiscal pressures, the province cannot afford to remain reliant on federal transfers alone. A coherent strategy involving policy reform, institutional strengthening, and digital transformation is crucial.
It’s time Balochistan turned its untapped revenue potential into a sustainable fiscal foundation, reducing dependency and empowering its institutions to deliver better outcomes for its people.
This article was published on publicfinance.pk
