- ‘Provinces will be urged to give up a certain percentage of their share in the divisible tax pool’
ISLAMABAD: As the meeting of National Finance Commission (NFC) would be held on Wednesday, the Ministry of Finance has finalised its agenda for the said meeting amidst expected differences with provinces over shares in the divisible pool.
Being the chairman of the commission, Finance Minister Asad Umar would chair the meeting, which would be attended by new members as well as finance ministers of the provinces. During the meeting, the representatives of all provinces would clear their positions and make demands for the next NFC.
According to finance ministry sources, the ministry has concluded its meeting on the agenda of the next NFC meeting with recommendations that the centre needs additional share in divisible pool keeping in view the demands of security, capital, Azad Jammu Kashmir (AJK) and Gilgit Baltistan (GB).
However, the ministry has not proposed any specific percentage of demand so as to leave the matter for deliberation in the meeting. The ministry, according to sources, would try to convince the provinces to give up a certain percentage of their share in the divisible tax pool.
The federal government reasons that it cannot afford meeting the development and security expenses of some of the backward areas that previously were under the federal administration or are still under the centre’s authority (AJK and GB).
“In order to address the issue of at least maintaining the previous share of provinces while meeting the demands of the centre, the provinces will be offered that the division would be made after deduction of security and other required funds of the centre. This way, the legal binding of at least maintaining the previous share of provinces, if not enhanced this time, will not be affected,” an official at the ministry told Pakistan Today.
As per section 3A of Article 160 of the Constitution, the share of the provinces in each award shall not be less than the share given to the provinces in the previous award.
“The centre will brief the provincial members about the increased financial needs of GB and AJK among other expenses. At least few billion rupees would be needed to meet the needs of war on terror,” the source said, adding that apart from the centre, the provinces, including Khyber Pakhtunkhwa and Sindh, would also demand more shares in the NFC.
The idea of early reduction of shares for the federally administered areas is likely to be opposed by Sindh, Punjab and Balochistan. However, the provinces may accept increased share to KP on account of an increase in its population, as 82 per cent of the divisible pool is distributed on the basis of population.
KP has valid justification to demand an increase in its share following the census and merger of FATA. However, Sindh government is also likely to demand an increase of one per cent in the NFC to meet requirements of Karachi and other cities.
Besides, Sindh would demand handing over of gas development infrastructure cess to provinces. It would also demand the authority of collecting sales tax on goods to the province.
It may be recalled that the previous government had failed to give 8th NFC Award which was due in 2015. The landmark 7th NFC Award was successfully concluded and implemented under Pakistan People’s Party rule in 2010.