Islambad:
President Asif Ali Zardari set up the 11th National Finance Commission for the finalization of a new resource distribution prize on Friday, opening the land so that the center is trying to recover part of the lost tax space that the provinces will try to resist.
“Within the framework of article (1) of article 160 of the Constitution, the president of Pakistan is happy to constitute the 11th National Finance Commission (NFC) with immediate effect”, a notification issued by the Ministry of Finance read on Friday.
The lifespan of the 10th commission ended last month, which held some meetings but lost steam after the provinces did not find any incitement to negotiate due to the chances of losing a tax space in the center. Under the 7th NFC allocation of 2010, the share of the provinces increased by 10% to 57.5% of the total federal divisible pool without giving them additional responsibilities.
It has contributed to a massive increase in public debt due to the unbearable budget deficit that the federal government has been managed since 2010. Central governments have also retained some of the expenses to achieve their political objectives in the provinces.
The Minister of Finance Muhammad Aurangzeb will chair the commission of nine members. The four provincial finance ministers will be the permanent members. In addition to this, each province has the right to appoint a technical member.
Nasir Mahmood Khosa, former secretary and former executive director of the World Bank, would represent Punjab. Sindh retained Dr. Asad Sayeed while Dr Musharraf Rasol Cyan will again represent Khyber-Pakhtunkhwa. Balutchistan brought Farmanullah as a technical member.
In a joint working document written by Sajid Amin and Vaqar Ahmad, the authors had argued that “future NFC prices include a gradual transition from a distribution of resources based on needs to share efficiency research resources”.
They had suggested reducing the weight of the population by at least 10% during the following two NFC prices; Reduce its share by an additional 15% in the following two awards to reduce its weight to 50% to 82%.
The federal government is already working on some of these privileges. The Minister of Planning Ahsan Iqbal has already proposed to freeze the population to 241.5 million for the distribution of resources.
According to an internal meeting held this week at the Ministry of Finance, one of the initial options envisaged by the federal government suggests that at least 10% to 15% of provincial federal tax actions should be linked to improvements in education, health, population management and climatic indicators. The government also wants to encourage the provinces to tax efforts by linking resources to tax efforts, sources said.
The ministry also prepares an article to show what the federal government finances would look like in terms of public debts and budgetary deficits after five years. The theme of the document will be that the existing 57.5% of the divisible pool that the provinces obtain must be reduced and that the cuts must be placed on the expenses which are the responsibility of the provinces but which are engaged by the center because of its own compulsions.
According to the mandate of the 11th commission, the NFC will make recommendations to the president for the distribution between the federation and the provinces of the net product of the taxes mentioned in article (3) of article 160 of the Constitution.
The new commission will also make recommendations concerning subsidies by the federal government to provincial governments. The Commission will examine the borrowing powers exercised by the federal government and provincial governments.
He will also discuss and decide questions relating to the sharing of financial expenses incurred or to be incurred by the Federation with regard to the subjects and questions which fall under the domain of the provinces and questions relating to the sharing of the financial expenses incurred or the obtaining of the Federation or the Provinces or at the same time with regard to transformative processing matters.
This is the major problem because the center faces expenditure which is not of a trans-provincial nature and grant an undue burden for the federal chessboard. The federal government finances roads in Punjab, Sindh and Balutchistan, which should have been funded by the respective provincial governments.
The new commission will also discuss questions relating to the financial expenses of national projects to be shared by the Federation and the provinces; And any other question relating to finance referred to the Commission by the President.
The federal government can ask the provinces to put aside part of the divisible swimming pool for the construction of large dams. The dams are now a question of national security and the provinces should contribute to it.
Under the 7th NFC price, Khyber-Pakhtunkhwa obtains 1% of the divisible swimming pool to mitigate the impact of war on terrorism.
The federal government also plans to demand explicit allowances for the capital of the capital of Islamabad, the Gilgit-Baltistan and Azad Jammu- & Cachemire, which are the responsibilities of the center.
Another significant consideration of the center is that province transfers should also be linked to allowances to local governments, have added sources.
