Widening gulf

Sindh has come out with yet another grievance against the federal government. Chief Minister Murad Ali Shah has blamed the Centre for holding back Sindh’s due share in the federal divisible pool, expressing the fear that Islamabad now plans to take away the powers of the provinces relating to collection of taxes under various heads.

In the absence of a counter-narrative by the Centre, Sindh’s claim may sound plausible — if not convincing. According to Shah, this year, the federal government has transferred Rs104 billion less than Sindh’s due share. The CM also claims that for the first time in the history of Pakistan, the federal fund transfers were less than in the previous year — Rs256 billion in the first seven months of this fiscal year as against Rs266 billion in the corresponding period the previous fiscal. The shortfall in the federal fund transfers had forced Sindh to cut the provincial development budget by Rs24 billion.

In fact, the 7^th NFC Award of 2009 followed by the 18^th Constitutional Amendment in 2010 had — instead of resolving the issue of federal controls and provincial autonomy though fiscal, administrative and legislative decentralisation — caused more problems. Both these documents seem to have been finalised hurriedly without taking into consideration the ground realities, especially the capacity of the provincial governments to manage these revolutionary changes of far-reaching consequences.

Apparently, a dispute persists between the Centre and the provinces on the imposition and collection of sales tax on goods and services. Sindh argues that since goods and services originate in its territorial jurisdiction, it has the right to collect sales tax while Punjab and K-P believe that since the goods and services are consumed in their territorial jurisdictions, the tax collection right rests with them. The Sindh CM, referring to a recent decision of Islamabad, also questions the authority of the Centre to determine property valuation. However, the proper forum to settle all the disputes arising out of the NFC or the 18^th amendment is the CCI. But all the parties are letting their grievances heard through the media instead of invoking the CCI’s jurisdiction which is likely to further widen the gulf between the Centre and the provinces.

Published in The Express Tribune, February 6^th, 2019.

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