PESHAWAR, Aug 8: Federal government has refused to accept NWFP’s plea to distribute 2.5 per cent General Sales Tax (GST) among provinces on population basis, according to official sources.
“NWFP’s stand over the mode of distributing the funds among provinces has not been accepted,” said official sources.
As per federal government’s decision, provincial governments would be allocated 2.5 per cent of the total amount Islamabad would raise through GST during the 2002-03 financial year. The money would be distributed among the provinces as additional support for their respective local body institutions.
NWFP government, said the sources, had adopted the stand that the amount should be distributed among the federating units in accordance with the resource distribution formula laid down under the current National Finance Commission (NFC) award, which makes population as basis for distributing resources from the Federal Divisible Pool (FDP).
However, the provincial government’s stand was not paid heed and federal authorities devised a formula which would divert major portion of the funds to Punjab and Sindh — the two main contributors to GST.
The NWFP would get Rs1.008bn under that account, apparently, much less than the amount it would have received had the amount been distributed among the federating units in accordance with the NFC award’s resource distribution formula.
The Rs1.008bn, said the sources, would be over and above the Rs866m amount the province is set to receive — in line with the past three years — as support to the local body institutions in lieu of octroi and zila tax.
Official sources said that though the Rs1.008bn would come as a substantial support to NWFP’s local body institutions in addition to providing fiscal space to the provincial government, the amount to be transferred to the province appeared to be negligible in comparison with the amounts Sindh and Punjab would get.
“The issue was raised on various forums including the NFC (under progress) but to no avail,” contained an official document.