PESHAWAR, Sept 12: NWFP has disputed the ratio at which federal government would be distributing funds among provinces out of the 2.5 per cent of the total General Sales Tax (GST) collection during the 2002-03 financial year, according to sources.

The provincial government has been projected to be released Rs1.008bn during the current financial year as financial support to its district governments.

The money would be provided from the total amount Islamabad would be distributing among the federating units in line with its decision to specify 2.5 per cent of GST collection in the 2002-03 financial year.

“NWFP government has sought increase in its share,” said the sources.

A demand to this effect has recently been made from the federal finance minister Shaukat Aziz. The issue would also be on the agenda of the next meeting of the National Finance Commission scheduled for Sept 14 and 15 at Peshawar.

The Rs1.008bn amount would be released to the province during the 2002-03 financial year against Rs866m the province used to get annually as support to its local body institutions following the abolition of octroi and zila tax.

The provincial government, said the sources, had sought distribution of 2.5 per cent GST amount among the four federating units either on the basis of their respective share in population — in line with the current NFC — or on the basis of resource distribution formula to be evolved for the new NFC.

If the provinces’ shares are calculated on the basis of their respective share in the population, NWFP would get Rs1.5bn more than the amount it has been projected to receive under the said account during the current financial year.

Disputing the ratio at which NWFP’s share has been calculated at Rs1.008 bn, the provincial government, said the sources, had adopted the stand that the quantum of funds to be released to NWFP should be more than the amount it has been specified for the 2.5 per cent GST amount allocated for distribution  among provinces had not come in lieu of octroi and zila tax.

Rather the fund has been allocated to extend financial support to the newly set up district governments.

“The government believes that the fund is meant for the functioning of local government, hence, its distribution among provinces should also be either on the basis of resource distribution formula laid down under the current NFC or as per the new NFC’s formula,” said the sources.