Sindh wants sales tax, new criteria for resource distribution
By Sabihuddin Ghausi
KARACHI, Nov 15: A new strategy is being worked out by the Sindh government for the next National Finance Commission deliberations to demand re-provincialization of sales tax and multiple criteria for distribution of national resources.
In addition to the population ratio, Sindh wants revenue generation capacity, needs of the province and its size and backwardness to be given due weight in allocation of funds. There is also a demand for bringing down the federal government’s share in national pool to 50 per cent, if not 45pc.
Sindh also wants de-federalization of the sales tax. “For five years after independence, sales tax was a provincial subject,” a well-placed source said, who recalled that it was fully federalized in the 1974 NFC award when Punjab leaders pressured the then PPP government to concede to this demand.
Sales tax was partially federalized in 1951 on the pretext of financial pressure owing to rehabilitation of heavy influx of Indian Muslims after 1947.
Sindh may use the same logic and argument for re-provincialization of sales tax because the heaviest pressure of illegal immigrants from Afghanistan, Iran, Bangladesh and Myanmar as well as job seekers from Punjab and the NWFP is being borne by it.
“We refuse to accept population as the only basis for resource distribution among the provinces,” a source told Dawn on Saturday. He said Sindh was not ready to accept anything agreed upon by the previous NFC.
The previous NFC at its meeting in Karachi on Aug 30-31 last year had agreed unanimously, as it was announced then, to maintain population as the only basis for the distribution of resources. That NFC was wound up in October last year after the general elections were held.
The current NFC, reconstituted with a delay of one year after the elected governments had been installed at the federal and provincial levels, is holding its first meeting next Tuesday. Sindh Finance Minister Sardar Ahmad and Abdul Karim Lodhi, the non-statutory member on the NFC, would represent the province at the meeting.
During the last one year, the
Sindh Assembly unanimously passed resolutions, on three occasions, demanding fresh arrangement for resource distribution. The NWFP and Balochistan assemblies also made the same demand.
But Sindh Assembly is the only legislature that wants provinces to be given the right to collect taxes and then give the share to the federation on the basis of their respective population ratios.
There is a lot of heart burning in Sindh after Finance Minister Shaukat Aziz on Friday refused to oblige Chief Minister Ali Mohammad Mahar with additional funds for some projects.
It may be recalled that President Gen Pervez Musharraf and Prime Minister Mir Zafarullah Jamali had promised to provide funds for these projects. The current fiscal year’s budget does provide Rs11 billion for development but with a condition that it will be given if the funds are available.
With a work-force of 450,000, Sindh’s salary bill comes to almost Rs30 billion. Pensions worth about Rs5 billion and Rs16 billion for debt servicing leave little to the provincial administration to spend on maintenance of stocks and to carry out development work. There is a plan to employ 38,000 more persons in the government departments, which is bound to push up provincial expenditure. Sindh’s desperation for more funds is bound to reflect in the deliberations of the NFC.
