Provinces asked to help increase tax-to-GDP ratio: meeting to review progress on NFC Award

The Finance Ministry has reportedly asked the provinces to fulfil their responsibility to help create conductive environment for increasing tax-to-GDP ratio to 15 percent. Sources quoted the Secretary Finance as saying at the concluding session of the bi-annual meeting of the National Finance Commission (NFC) Award on Thursday that it was the responsibility of provinces to create conductive environment in increasing tax-to-GDP ratio.
"The NFC Award is not just the obligation of the federal government, the provinces also need to fulfil their responsibilities." Representatives of the Federal Board of Revenue (FBR) reportedly stated that they had already requested the government to slash tax target because it would not be achieved. Similarly, the share of provincial transfer would also be reduced from divisible pool and the provinces may be unable to generate budget surplus of Rs 80 billion.
Finance Minister Saleem Mandviwalla chaired the meeting on bi-annual monitoring of the implementation of NFC Award for the Period from July-December. The meeting decided that federal and provincial finance ministries would meet on a monthly basis to know about the progress on revenue collection and accordingly make adjustments.
The meeting was informed that FBR had reportedly collected revenue worth Rs 865.06 billion till December 31 last year and the provincial share on the basis of revenue collection had been worked out in the divisible pool as Rs 485.63 billion. Additionally, Rs 12.97 had been released to Balochistan to match the budgeted figure of Rs 114.21 billion. Similarly, Rs 8.53 billion (1% of net proceeds) had been paid to Khyber Pakhtunkhwa on account of War on Terror, adding that as much as Rs 507.13 billion had been distributed among provinces.
The meeting was further informed that the entire net proceeds of Royalty on Crude Oil reported by Ministry of Petroleum and National Resources up to December 31 last year had been distributed among the provinces. The entire net proceeds of Royalty and Surcharges had also been distributed in accordance with provisions of the Award. The meeting was informed that Sindh was entitled to receive grant-in-aid equivalent to 0.6 percent of the provincial share in the divisible pool in lieu of losses on abolition of Octroi and Zila Tax.
The compensation against abolition of Octroi and Zila Tax amounting to Rs 3.49 billion had been paid to Sindh. The NFC meeting was attended by high officials of Federal Finance Division along with provincial finance departments. The meeting was held as per Claus 3 (B) of Article 160 of the Constitution.