The 1935 Act was one of the most comprehensive acts in British parliamentary history. Work on the act began immediately after the Montague-Chelmsford Reforms of 1919 had established dyarchy. In the end, the British decided to water down their most celebrated achievement — the unity of India. The British had boasted for decades that they were the first power to achieve what both Asoka and Akbar failed to do — they had united the vast Indian subcontinent under one government. Nevertheless, decades of central government made it clear that some form of devolution (especially with Indian nationalist pressure) was necessary. Also, it was obvious that it was impossible to develop unitary policies for this subcontinent with such vast differences. Therefore, the 1935 Act provincialised India by devolving power. The British also gave teeth to the new provincial governments. Broadly, the centre collected 55 per cent of all taxes, with the provinces collecting the rest, so that they would be able to finance most of their projects without federal support. The principle was of self-sufficiency through local resources. A large number of subjects were made provincial, with a concurrent list for subjects which the provinces were not judged to have enough competencies in.
In Pakistan, the federal system was undermined almost immediately. Beginning with the appropriation of sales tax in March 1948 by the centre, a number of provincial and concurrent list subjects became the exclusive preserve of the centre. Hence, the 1973 Constitution, while borrowing heavily from the 1935 Act, moved sales tax and mineral taxes to the federal list, for example. Without the power to raise their own taxes (especially since sales tax was becoming a major source of revenue), the provinces were perpetually made dependent on central distribution of income (we need not go into the National Finance Commission award bickering here), leading to an endless centre-provincial and interprovincial tussle.
The 18th Amendment, rather than improving the centre-provincial equation in terms of more provincial autonomy, has further exacerbated the problem. Without sufficient taxation powers, the provinces will never have enough funds to effectively run the subjects currently being devolved, nor would they be able to control the rate of taxes in response to the conditions of their province. Also, control of the natural and mineral resources in the provinces only leads to local tensions (as evidenced in Balochistan) and results in little provincial revenue generation and development. Therefore, what is needed is a full return of taxation powers and control of mineral resources to the provinces. We also need to reconsider further concurrent list subjects, like electricity, which have been moved to the federal list by the 18th Amendment. It is a pity that the Punjab chief minister had to write an opinion piece to lament the problems surrounding the establishment of new power plants due to the centre, when he should actually be responsible for such development in his province. A strong federation needs strong constituting units, which are sufficiently autonomous and self-supporting.
The centre-province tussle will certainly continue until we establish true autonomy on the basis of the federation envisioned by the 1935 Act, which will also lead to the ‘independent units’, which were to ‘constitute state(s)’ as demanded by the 1940 Lahore Resolution.
Published in The Express Tribune, September 6th, 2011.
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