ISLAMABAD, July 23: President General Pervez Musharraf has reconstituted the National Finance Commission as the tenure of the existing NFC has expired on July 21.

The new 10-member seventh NFC would be headed by Prime Minister Shaukat Aziz, who also holds the portfolio of the finance ministry. The commission has been formed in pursuance of Article 160 (1) of the Constitution, says a notification issued here on Saturday.

The previous NFC, sixth after the promulgation of the 1973 Constitution, was notified on July 21, 2000.

Finance ministers of Punjab, Sindh, the NWFP, Balochistan and adviser to the prime minister on finance Dr Salman Shah will be members of the commission.

Besides, one member from each province will be notified in consultation with provincial governors while federal finance secretary will act as official expert of the commission.

The terms of reference for the commission are as under: (a) The distribution between the federation and provinces of net proceeds of the following taxes: (i) Taxes on income, including corporation tax, but not the taxes on income consisting of remuneration paid out of the federal consolidated fund; (ii) Taxes on the sales and purchases of goods, imported, exported, produced, manufactured or consumed; (iii) Sales Tax on services (CE Mode); (iv) Export duties on cotton; (v) Consider the inclusion of other federal taxes, including customs duties and federal excises, but not including taxes on income paid out of the federal consolidated fund. (b) The making of grants-in-aid by the federal government to provincial governments; (c) The exercise by the federal government and provincial governments of the borrowing powers conferred by the constitution; (d) Examine the question of rationalization of payment of royalties on crude oil and of surcharge on natural gas collected by the federal government to provincial governments; (e) To consider review of the distribution of share of taxes between the federal government and provincial governments; (f) To develop and enforce a mechanism for setting parameters to achieve fiscal discipline at the federal and provincial levels for ensuring consistency in maintaining an appropriate fiscal balance at the consolidated level; and (g) Any other matter relating to finance referred to the commission by the president.