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| May 12, 2005 | Thursday | Rabi-us-Sani 3, 1426 |
Punjab, NWFP reject Sindh’s NFC formula
ISLAMABAD, May 11: Punjab and the NWFP have rejected the resource distribution formula for the National Finance Commission (NFC) award proposed by Sindh, stipulating a two per cent weight to be given to ‘documented taxes’ pool. With the emergence of this new stumbling block, finance ministry officials say that a fresh NFC award is unlikely to take shape.
In that case, the president would have to extend the existing arrangement for another year, they said. They also cited a statement by Adviser to the Prime Minister Dr Salman Shah that the finalization of new NFC award could take “two weeks to two years”.
Talking to Dawn, Punjab’s finance minister Sardar Husnain Bahadur Dareshek said that Sindh was saying the same thing in a different way. He claimed that it was unacceptable not only to Punjab but also to the NWFP and Balochistan.
He said Punjab was opposed to the inclusion of revenue collection in the multi-factor formula on principles. The principles do not change with a change in names. To him, it makes no difference to give weight to revenue collection or personal income tax and retail sales tax.
“We believe that a new formula should reduce disparities and nothing should be considered which increased disparities,” he said. The Sindh proposal would add to these gaps in the condition of people in different parts of the country.
On being contacted, an official of the NWFP government expressed almost identical views, saying that small provinces would suffer badly owing to their low tax base if revenue or in its place personal income tax and retail tax were accepted as indicators. Nobody from Balochistan could be contacted on the subject.
A senior official of the Sindh government who has been involved in NFC deliberations confirmed that his province had proposed giving some weight to personal income tax and retail sales tax along with population, poverty/backwardness and inverse population density in the distribution of divisible pool because the two taxes were well-documented with province-wise audited accounts.
He said that Sindh had also proposed a formula to compensate the NWFP and Balochistan through special funds because the two provinces would lose owing to their limited revenue base. He, however, said it was beyond understanding why other provinces opposed the proposal.
In his view, Punjab and the NWFP were going to benefit a lot in the coming few years owing to increased trade and business activities among regional countries, including India, Afghanistan and the Central Asian Republics.
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