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| 09 April 2004 | Friday | 18 Safar 1425 |
Consultations for consensus on NFC award begin
ISLAMABAD, April 8: Amid a fresh demand for transferring the sales tax collection to provinces, the prime minister's secretariat has started consultations with provincial chief ministers for the sixth National Finance Commission (NFC) award.
Following a briefing to the prime minister last week by the finance minister on the stalemate between the centre and provinces over a resource-sharing formula and differences among provinces over the criteria for resource distribution, prime minister's principal secretary Shuja Shah has been assigned the task to contact provincial chief ministers on the subject, informed sources told Dawn.
The sources said finalization of a consensus NFC award was not possible without a political push and a process had been set in motion to achieve that. Mr Shuja was not available for comments. Finance Minister Shaukat Aziz also was in contact with provincial governments.
The sources said the prime minister was likely to convene a meeting of chief ministers some time next week because the government was aiming to at least finalize, even if a formal announcement was not possible, the next award by April 22, the date when the annual IMF-World Bank meetings would begin in Washington.
The provincial share in the federal divisible pool and the multi-factor formula for distribution of resources among provinces are the two issues that need to be resolved before the next award is finalized.
Moreover, the provinces' demand for a 2.5 per cent share in the GST, in addition to their share in the divisible pool, is still unresolved. The provinces have demanded for the first time that the sales tax which has been a provincial subject and taken over by the centre in a phased manner should be returned to the federating units, a participant of the last NFC meeting in Quetta told Dawn.
The provinces argue that this handover would be in line with the federal government's agenda of financial devolution and pull the provinces out of their current financial constraints.
The demand has gained more strength because Punjab has also suggested that if the multi-factor formula for distribution of resources is to be adopted, the tax structure should be devolved to the provinces in the first place.
However, the federal government has told the provinces that it could not accept their demand as financial devolution would take at least 4-5 years. The source said three smaller provinces had taken a joint stand that they would not accept population as the sole criterion for distribution of resources.
The sources said the finance ministry was in contact with the provincial governments to convene the next NFC meeting before April 20 which could coincide with an expected meeting of chief ministers with the prime minister. The sources said most of the budgetary exercise was usually completed by the month of May and unless the NFC award was finalized they would not have a clear picture of the overall resources to make projections.
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