The federal government is unlikely to announce the new National Finance Commission (NFC) Award before the next budget, as it failed to develop consensus among the provinces, it is reliably learnt. Acording to sources, factors, like a prolonged political stand-off between the ruling PPP and PML-N on the judges issue, the resignation of Senator Raza Rabbani, ex-Federal Minister for Inter-Provincial Co-ordination and finally the impoisition of governors rule in Punjab, had broghut negotiations on the award to a complete halt.
On the other hand, the PPP-led Sindh government has constantly been claiming that the long-awaited NFC Award would be announced before the Budget 2009-10. While no progress is in sight in line with the Sindh governments claim as the budgeting process has started.
Evolving consensus among the provinces on the issue would take long time, as at present the deferal government has not even appointed any new minister to resolve the issue, they said, adding that the present democratic government would have to present next budget on the basis of interim NFC announced by former president General Pervez Musharraf (Retd).
The last NFC meeting was cancelled due to absence of finance minister of Punjab due to imposition of governors rule, they said and added that no meeting could be conevened if there exists no finance minister under the Constitution of 1973. The budget-making exercise for the next fiscal year has begun and possibility of announcement of new award by the commission before June 30 is almost coexistent, they added.
They said that the Sindh government had also opposed the inclusion of Minister of State for Economic Affairs Hina Rabbani Khar in the NFC. They said Sindh was insisting the revenue collection should be made one of the basis for distribution of resources among the federating units from the federal divisible poll.
To a question, they said, initially Sindh was demanding to include revenue generation in the resources distribution formula but after insistence from other stakeholders it changed it with revenue collection. Punjab and other provinces were of the view that Karachi was the sole port city and everything comes through it.
It is not justified to include revenue collection on the name of Sindh without catering incidence of burden being borne by people of other provinces who paid taxes in Karachi and built their factories in other parts of the country, they said.
"We will stick to our demand for adoption of multiple criteria and want nominal weightage for inclusion of revenue collection in the resources distribution formula," they said. However, they said, the Sindh government had recommended that the decision on the NFC award be made on the basis of multiple factors and the right of services tax should be given to the provinces.
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Breakdown of Provincial Share in the Divisible Pool
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Rs in billion
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2005-06 2006-07 2007-08 2008-09 2009-It)
(1st year) (2nd year) (3rd year) (4th year) (5th year)
Heads
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CBR Revenue 690.00 781.18 884.18 1,000.89 1,133.01
Less Excise Duty on NO 5.71 6.28 6.91 7.60 8.36
Less GST Provincial 3.10 3.56 4.08 4.68 5.37
Less Workers Walfare Tax 5.50 5.97 6.47 7.03 7.62
Total Divisible Pool Taxes 675.69 765.37 866.72 981.58 1,111.66
Less Federal Income Tax & Collec. 35.84 40.55 45.88 51.91 -
Divisible Pool (net) 639.85 724.82 820.84 929.67 1,052.93
Pool I 24.19 28.05 32.72 38.14 44.67
Pool II 217.68 252.49 294.52 343.25 402.07
1/6th of Sales Tax 46.06 52.83 60.60 69.50 79.72
progress Pray. Share (%) 45.00% 45.99% 47.25% 48.50% 50.00%
Total Provincial Share 287.93 333.37 387.84 450.89 526.4(
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Pool I 1.21 1.40 1.64 1.91 2.23
Punjab Pool II 124.86 144.83 168.94 196.89 230.63
1/6th of Sales Tax 23.03 26.41 30.30 34.75 39.86
Total 149.10 172.64 200.88 233.55 272.72
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Pool I 6.05 7.01 8.19 9.53 11.17
Sindh Pool II 51.61 59.86 69.83 81.39 95.33
1/6th of Sales Tax 16.06 18.42 21.12 24.23 27.79
Total 73.72 85.29 99.14 115.15 134.29
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Pool! 8.47 9.82 11.45 13.35 15.63
NWFP Pool!! 30.08 34.89 40.70 47.44 55.57
1/6th of Sales Tax 4.57 5.25 6.02 6.90 7.92
Total 43.12 49.96 58.17 67.69 79.12
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Pool I 8.47 9.82 11.46 13.35 15.63
Balochistan Pool II 11.12 12.90 15.05 17.54 20.55
1/6th of Sales Tax 2.40 2.76 3.16 3.63 4.16
Total 21.99 25.48 29.67 34.52 40.34
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