ISLAMABAD, Jan 29: Sindh is estimated to lose Rs10 billion in its share from the federal divisible pool in the first year of the amended National Finance Commission Award and Rs41 billion on account of general sales tax over the next five years.
The figures were compiled by Sindh’s finance department have been submitted to the province’s chief minister’s secretariat for a formal protest to the federal government, an official of the Sindh finance department told Dawn.
He, however, said that Chief Minister Dr Arbab Ghulam Rahim was unlikely to take up the matter with the federal government because he had given an undertaking in writing to accept President Musharraf’s decision.
He said Sindh would lose Rs10 billion next year on account of the federal divisible pool share. Losses under this head in the subsequent years would depend on the overall size of the federal divisible pool in a particular year.
Similarly, he said, Sindh would lose another Rs40 billion over a period of five years because of rejection by the centre of its demand to distribute 2.5 per cent of the GST on the basis of actual revenue collection. Even on the basis of formula announced by the president, Sindh would lose about Rs25-27 billion on account of 2.5 per cent GST.
Moreover, Sindh would also face significant losses as a result of increase in the subvention pool because the amount had been increased from Rs8 billion to more than Rs27 billion and the size of the federal divisible pool would become smaller.
Sindh has been consistently demanding its share from the GST collection entirely on the basis of historical collection of octroi and zila taxes as declared by the federal government. A federal government audit had determined Sindh’s share at 46 per cent.
The demand has been rejected in the amended NFC. Instead, 50 per cent of the collection would be distributed on the basis of historical collection and 50 per cent on the basis of population. In the old NFC, 62.5 per cent of GST was distributed on the basis of historical collection and 37.5 per cent on the basis of population.
Next year’s total FDP has been estimated at around Rs725 billion. Of this, provinces’ share would stand at around Rs330 billion.
Under the 2002 resources distribution formula, which was accepted by Sindh but was discarded by the centre and Punjab, an annual subvention fund of Rs20 billion was to be instituted. This fund was to be given only to Sindh, NWFP and Balochistan. In the current formula, the size of the subvention pool has been increased but now Punjab would also be a recipient with over 11 per cent share.
