ISLAMABAD: Of the four provinces, Punjab will get the largest share from federal divisible pool in the next fiscal year, which will almost be equal to what the other three will collectively get.

According to a budget document, a total of Rs3.41 trillion in taxes will be transferred to the provinces, out of which the constitutional share of Punjab will come to Rs1.69tr. Sindh’s share from the divisible pool will be Rs848 billion, followed by Rs559bn for Khyber Pakhtunkhwa and Rs313bn for Balochistan.

The procedure for distribution of resources among the provinces has been spelt out in Article 160 of the Constitution, which provides for setting up of the National Finance Commission (NFC) with intervals not exceeding five years.

The mandate of the NFC is to make recommendations to the president for distribution of resources between the federal and provincial governments. Under the relevant provisions of the President’s Order No. 5 of 2010, as amended in 2015, the taxes in the divisible pool consist of income tax, wealth tax, capital value tax, taxes on sale and purchase of the goods imported, exported, produced, manufactured or consumed, export duties on cotton, customs duties, federal excise duties, excluding excise duty on gas charged at well-head, and any other tax that may be levied by the federal government. Under the order, one per cent of the net proceeds from the divisible pool taxes shall be assigned to the government of Khyber Pak­htunkhwa to meet the expenses on “war on terror”.

After deducting the amounts, of the balance amount from the net proceeds of the divisible pool taxes, 56pc was to be assigned to the provinces during the financial year 2010-11 and 57.5pc from the financial year 2011-12 onwards.

The share of the federal government from the net proceeds of the divisible pool was to be 44pc during the financial year 2010-11 and 42.5pc from the financial year 2011-12 onwards.

The province-wise allocations are based on multiple weights as agreed upon, where population matters the most as it amounts to 82pc, followed by other yardsticks, including backwardness and share in revenue generation.

Published in Dawn, June 12th, 2021

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