Former Finance Minister, Dr Hafiz Pasha stated that the incumbent government may not be inclined towards pursuing a new NFC award. He gave this statement while speaking at the 2nd Consultative Session of the National Finance Commission (NFC) Award organised by PRIME Institute.
Pasha stated that the enforcement of the 18th constitution in its fullest spirit should be ensured. He highlighted the pitfalls of double taxation on the same tax base by different government authorities is not right and needs to be abandoned. He also suggested that all provinces should have uniformity of tax rates in order to avoid competition for the same tax base.
He also added that after the conclusion of the census, the NFC horizontal sharing formula may also need to be revised. He mentioned that incentives shouldn’t only be devised for generation of resources, but also for their allocation. Pasha also recommended conditional grants should be given in priority areas such as education and health.
According to veteran tax expert and lawyer of Supreme Court, Dr Ikramul Haq, taxation rights had not been allocated transparently between provinces and the centre. He mentioned that since the provinces did not have the freedom to set their own tax policy, hence conflicts always arose between them. Haq indicated that the presence of such high levels of double taxation was worrisome and suggested that major sales tax reforms should be undertaken.
According to a representative from the business fraternity, Zahid Hussain, 16pc was not a viable rate of sales tax as many consumer products lost value for buyers at such a high rate. He said those individuals not in the tax net are paying taxes in the form of withholding taxes.
Future consultations planned on the NFC Award are going to be held in Peshawar, Quetta and Karachi.