The Finance Ministry Tuesday notified the 10th National Finance Commission (NFC) after the approval of the President to discuss and work out a mechanism to distribute resources between the federal government and the provinces as well as allocation of resources for the AJK, Gilgit-Baltistan and the newly-merged districts of the KP from the Divisible Pool of taxes.
The NFC Award has been due from 2015 after the expiry of the 7th NFC Award and discussion on previous, 9th NFC remained inconclusive owing to differences between the federal government and the provinces over the distribution of resources. Finance Ministry now after the approval of the President in pursuance of Article 160 (1) of the Constitution, notified NFC with effect from April 23. 2020. Under the 7th NFC Award, tilt of resources had been shifted towards provinces and the federal government in the past as well as the current one had been complaining that after meeting the debt servicing and defense expenses; there was nothing left with the federation to meet other expenditures.
An official said that the Finance Ministry may propose creation of a "special pool" as there was proposal during the caretaker government that one percent of the Divisible Pool may be set aside for the BISP for providing support to the vulnerable, two percent for security-related expenditure and three percent for development of the federally administered tribal areas. Thinking behind this proposal was that if the federal government provides support to the vulnerable, provinces should also share, and percentage of Dividable Pool should be set aside, the official added.
According to the notification, the composition of the commission is: (1) Minister for Finance, Government of Pakistan - Chairman, (2) Minister for Finance, Government of Punjab - Member, (3) Minister for Finance, Government of Sindh - Member, (4) Minister for Finance, Government of Khyber-Pakhtunkhwa - Member, (5) Minister for Finance, Government of Balochistan - Member, (6) Advisor to the Prime Minister on Finance and Revenue - Member, (7) Tariq Bajwa, Government of Punjab - Member, (8) Dr Asad Sayeed, Government of Sindh - Member, (9) Musharraf Rasool Cyan, Government of Khyber-Pakhtunkhwa - Member, (10) Javed Jabbar, Government of Balochistan - Member, (11) Finance Secretary, Government of Pakistan - official expert.
Federal Finance Secretary Naveed Kamran Baloch will serve as an expert for the commission and it further described the composition of the committee that will decide the share of fiscal resources earmarked for provinces. Adviser to Prime Minister on Finance and Revenue Dr Abdul Hafeez Shaikh will preside over the commission's functions in the absence of a finance minister.
The notification said that the terms of reference (ToRs) of the 10th NFC included; (a) distribution between the federation and the provinces of the net proceeds of the taxes; (i) taxes on income including corporation tax, but not including taxes on income consisting of remuneration paid out of the federal Consolidated Fund; (ii) taxes on the sales and purchases of goods imported, exported, produced, manufactured or consumed; (iii) export duties on cotton, and such other export duties as may be specified by the President such duties of excise as well as other taxes as may be specified by the President.; (b) making of grants-in-aid by the Federal Government to the Provincial Governments; (c) exercise by the Federal Government and the Provincial Governments of the borrowing powers conferred by the Constitution; (d) assessment and Allocation of resources to meet expenditures related to Azad Government of the States of Jammu and Kashmir, government of Gilgit-Baltistan and newly merged districts of Khyber Pakhtunkhwa (erstwhile FATA); (e) assessment and allocation of resources to meet expenditures made on security and natural disasters/ calamities; (f) assessment of total public debt and allocation of resources for its repayment; (g) rationalization of subsidies given by the federal and Provincial governments in their budgets and agreeing on a mechanism to finance them; (h) exploring ways to reduce losses of State-owned enterprises and agreeing on mechanism for sharing these losses between the Federal Government and the Provincial Government;( i) any other matter relating to finance referred to the Commission by the President. The Finance Division would, as per the Rules of Business, 1973, provide the Secretarial support to the Commission.
In January 2019, an official notification from the Finance Division was issued on the Government of Pakistan's decision to reconvene the NFC.
Under the existing NFC arrangements, the Federal Divisible Pool (FDP) is distributed under the ratio of 57.5 percent to 42.5 percent among the provinces, and the federal government, respectively.
Currently, the issues of the NFC Award and the 18th Amendment have become a point of conflict between the government and the opposition parties.
Comments
Comments are closed.