KARACHI, Feb 19: The sixth National Finance Commission (NFC) is holding its fifth meeting on Friday at Peshawar with no indications of any agreement or consensus on fundamental issues having been reached among the stakeholders.

There is only a partial agreement. All the four provinces have agreed to demand a straight 50 per cent share of the divisible pool of taxes. Finance Minister Shaukat Aziz agrees to raise the existing provincial share from 37.5 per cent. But he is silent as to how much and in what manner this increase in provincial share will come about. He is, however, confident of NFC giving a consensus award by March 31 next.

But Shaukat Aziz could not manage to get provinces agree in the last NFC when he represented a military government. The last NFC was constituted in July 2000 and failed to come out with any consensus agreement even after 27 months in October 2002. The provinces were then represented in the NFC by Islamabad's handpicked ministers.

Probably Shaukat Aziz had before him the example set by the earlier NFC, which was constituted by President Sardar Farooq Khan Leghari on December 10, 1996. It was headed by the then caretaker Prime Minister the late Malik Meraj Khalid who also held the portfolio of finance. But the real man behind was Shahid Javed Burki who as a World Bank executive had detected many faultlines in Pakistan's economic landscape and had finally become the real finance Czar.

Mir Zafarullah Khan Jamali, the caretaker Chief Minister and incharge of Balochistan's finances was another heavyweight in the NFC. Sindh was then led by a firebrand nationalist Mumtaz Bhutto.

The NFC came out with a "consensus award" within less than 45 days on February 2, 1997 when elections were being held in Pakistan. This NFC award left deep scars on economy and finances of Sindh, Balochistan and NWFP from which these three provinces still bleed.

An agreement was made to reach in the last NFC too but then it was wisely decided to leave this matter to the next governments which were in the process of formation at Islamabad and in provincial capitals after the elections.

It is true that there was a lot of manipulation and the game of carrot and stick was replayed in formation of the governments at the federal and provincial levels. Pliable governments have been formed in Islamabad and in provinces. But a general election, howsoever controlled and manipulated it may have been, has its own dynamics. It generates immense heat and create a lot of expectations.

These expectations found a voice in Sindh Assembly early last year when it demanded in a unanimously adopted resolution that provincial contribution in the federal divisible pool should be on the basis of population.

The resolution argued "if the federation distributes the share of provinces on the basis of provinces' population, it should collect taxes on same basis from the population."

The NWFP and Balochistan assemblies too voiced their bitterness and dismay on the rough treatment they had been receiving in allocation of fiscal resources.

Questions are now being raised on the representative character of the NFC. The provinces now want a control and command on their respective natural resources.

Balochistan complains that Sui gas provided Pakistan's foreign exchange in billions of dollars since 1954. But hardly two per cent of Baloch population enjoy gas connection.

The NWFP wants accumulated amount of hydel profits. Sindh wants revenue generation be given due weightage. Sindh also hosts the largest number of immigrants from Punjab and NWFP. No NFC award took account of this factor.

The provinces also want a share in privatization proceeds and a relief in debt servicing. The federal government has remained silent on these issues. Then finally the issues of general sales tax.

The sales tax in Pakistan was known as "bikri tax" in 1947 and was collected by provinces. It was partially federalised in 1951 and fully brought under control of the federal government in 1974.

The federal government is also collecting sales tax on a number of services. Sindh is the hub of services with port and shipping. Obviously the sales tax on shipping agents and allied services should go to Sindh. Sindh is also the centre of financial services and generates tax.

The greater demand for share in national resources mean a marked reduction in federal expenditure. How will this come about is a question that has to be answered by the leadership.