LAHORE: Punjab on Tuesday joined other federating units in calling for an early announcement of the 9th National Finance Commission (NFC) Award to streamline tax collection systems between the centre and the provinces, reduce leakages and increase tax-to-GDP ratio.
Sindh, Khyber-Pakhtunkhwa and Balochistan have already urged the federal government to announce the new award at the earliest, fearing that further delay would promote a sense of deprivation among them.
The federal government, however, appears to be backpedaling on the issue. Finance Minister Ishaq Dar has said that the government has no plans to change the NFC formula — for now. “We want to establish the next NFC award before the end of this fiscal year,” Dar told the media a few days ago after a meeting to discuss the first bi-annual monitoring report on NFC award.
“We cannot delay the NFC award on the pretext that the latest census data is not available because the award itself is important. It plays a lifeline role for the provinces,” Punjab Finance Minister Dr Ayesha Ghaus Pasha said while addressing a news conference after chairing a two-day meeting of NFC working groups.
Four working groups were formed by the federal government to formulate the 9th NFC award. Punjab heads the working group on Resource Mobilisation at the Federal and Provincial Level, Sindh on Devolved Vs Integrated Tax Structure Evaluation of the Tax Collection Framework in Pakistan and the federal government on Rationalisation of Subsidies and Grants.
Pasha, while endorsing the stands of Sindh, K-P and Balochistan, said it was important to have the award announced before December this year, adding that there was no need to wait for a fresh population census because the federating units have already prepared and presented their working papers.
She conceded that Punjab would be the major loser in the absence of the latest data on population as the factor still dominates the formula with a share of 82%. However, she added that “since we’ve always played the role of a ‘big brother’ for the sake of the federation, the province would not try to hold back the process, and rather suggests that the federal government go ahead and announce the award”.
“We have requested the federal government to call the 9th NFC award meeting without any delay because the provinces have done their assigned working group tasks and will submit their recommendations by the end of September,” Pasha disclosed.
The Punjab finance minister also tried to support the federal government’s stance on the population census, saying, “Logistics rather than any political considerations had been delaying the holding of a fresh population census because the exercise requires army escort.”
Pasha said it was too early to say whether Punjab will continue 2% component sharing with Balochistan. “It will be decided in the upcoming sessions.”
Meanwhile, responding to the concerns raised by the federating units about the non-serious attitude of the federal government, Finance Division Joint Secretary Syed Anwarul Hassan said the assigned working paper would be shared among the stakeholders this month, adding that the federal government has been seriously working on the 9th NFC award.
“The objective of the working group meeting was to move forward on the NFC award.”
However, K-P non-statutory member Professor Muhammad Ibrahim Khan showed his serious concern over the centre’s attitude. He said the federal government did not share its working paper with the stakeholders. “If the federal government is serious in announcing the NFC award, then it must share its working paper with the stakeholders soon, to show its seriousness on the issue.”
He said the federal government had failed to hold quarterly review meetings of the ongoing NFC award despite repeated calls from the provinces. He also asked the federal government to call its working group meeting followed by the main meeting of the 9th NFC award to start deliberations on it.
K-P Finance Minister Muzaffar Syed advocate lauded the efforts of Punjab in ‘successfully’ arranging the working groups meeting in Lahore. He stressed the need for jointly working for ‘national security’ and ‘integration’. Since all the provinces have timely completed their tasks, the federal government will hopefully soon convene its meeting.
Sindh Finance Secretary Syed Hassan Naqvi said it was encouraging to see that no major differences cropped up during the working groups meeting. He believed this attitude would help in amicably announcing the award.
Earlier, the K-P representatives presented their working group report on which all members suggested that budget estimates should be evaluated in accordance with the provinces expenditures after the 18th constitutional amendment which increased the responsibilities and expenditures.
Published in The Express Tribune, September 7th, 2016.