ISLAMABAD: The first meeting of the 10 NFC Award has formulated seven sub- groups with the direction to present recommendation on the basis of terms of reference (TORs).

Finance Minister Dr Abdul Hafeez Shaikh said that macroeconomic and vertical distribution between federal government and provinces sub group to be headed by the federal finance secretary, while horizontal distribution between provinces to be headed by the Balochistan province.

He further stated that resources for merged districts of the FATA, which would be reflected in the finance commission, to be headed by finance minister Khyber-Pakhtunkhwa and sub-group on straight transfer from federal government to the provinces on account of gas royalty etc to be headed by the finance minister Sindh, whereas sub-group on harmonization of taxes and ease of business would be headed by finance minister Punjab.

Shaikh said that on the suggestion of some members, a separate group on pension which has financial implication on federation and provinces was also formulated.

According to a statement by the Finance Ministry issued after the meeting, Finance Minister, who presided over first meeting, stated that the NFC has been mandated by the Constitution to recommend to the President for amicable distribution of financial resources between the federation and the provinces of the net proceeds of the taxes.

The NFC is a forum to develop harmony between the federal and the provinces and to work out a sustainable resource sharing formula with mutual consensus, he added.

Federal Secretary Finance outlined the TORs of the NFC and the main tasks before the NFC which includes developing of a sustainable macroeconomic framework for the 10th NFC Award, vertical revenue sharing, selection of indicators for horizontal distribution formula, simplification of taxes to facilitate businesses, and bringing erstwhile FATA at par with the rest of the country.

During the deliberations, members of the Commission highlighted emergent financial issues, including the need to increase the size of the pie for everyone, rising burden of pension payments and need for closer coordination between federal and provincial revenue collecting agencies.

The participants discussed the need for harmonisation of revenue collection operations at respective levels of the federal and provincial governments to broaden fiscal space and streamline revenue collection.

The meeting formulated seven sub-groups with specific tasks on the basis of TORs of the Commission with the direction to present recommendations in due course of time.

The finance minister called upon all the members to do their best to come up with focused and workable recommendations to make the 10th NFC Award successful.

Earlier, while talking to media outside the ministry before the meeting, the finance minister said that the basic purpose of the meeting was to finalise the agenda of the NFC and form group on various sectors.

After the meeting, Chief Minister Sindh Murad Ali Shah told the media that even though this was an inaugural meeting of the 10th NFC award, the provinces have plainly informed the federal government about their issues and emphasised the need to increase the size of the pie instead of looking at others’ pocket.

When asked whether the federal government raised the issue of seven percent deduction from the divisible pool for allocation of merged district of FATA, AJK/G-B and security, he said that the TORs have been deferred till the next meeting, and there was no formal discussion on the matter.

The chief minister Sindh also pointed out about the negligible increase in the Federal Board of Revenue collection in the divisible pool during the 2018-19 and 2019-20 compared to 2017-18, and stated that consequently, the federal government and the provinces suffered.

He said that even during the seven months of the current fiscal year, there was only six percent growth in the FBR tax collection, whereas, the Sindh Revenue Board (SRB) collection was up by 15 percent.

Copyright Business Recorder, 2021