ISLAMABAD, Aug 8: The government has decided to announce the National Finance Commission (NFC) award — a formula of distribution of financial resources among the four provinces and the federal government — before the October elections.
The decision was taken here on Thursday at a meeting presided over by President Gen Pervez Musharraf and attended by the provincial governors, finance minister, secretary general finance, deputy chairman Planning Commission and all the provincial finance ministers, an official told Dawn.
The decision to finalize and announce the NFC award before elected governments take charge at the Centre and the provinces, was taken on the unanimous demand of the provincial governments, the official said on request of anonymity.
The stake-holders — provincial governments — were of the view that the matter, which is of a highly sensitive nature, should be settled by the present government.
A meeting of the NFC would be convened within the next two weeks, probably in Karachi, to allow five stake-holders — four federating units and the federal government — to hammer out a consensus formula of revenue distribution, to be applicable over the next five years.
Interestingly, the last award was also announced by a non-elected government headed by caretaker prime minister Malik Meraj Khalid.
The provincial governments, which have some reservations about the current formula of revenue distribution, insisted that the new formula be devised without further delay.
The National Finance Commission, as per the requirement of Article 160 of the Constitution, was established last year by the government. Four committees were also constituted to formulate recommendations on different aspects of the revenue distribution and collection.
All these four committees had finalized their recommendations and the commission would now only finalize a new distribution formula for the next four years as stipulated in the constitution.
Under the last award, announced in February 1997, the federal share in the net proceeds of divisible pool of taxes was fixed at 62.5 per cent, with the remainder of 37.5 per cent going to the provinces.
The share of the provinces was: Punjab 57.9 per cent, Sindh 23.28 per cent, the NWFP 13.54 per cent and Balochistan 5.3 per cent.
Earlier, in a separate presentation made to the President Gen Pervez Musharraf by the National Reconstruction Bureau in the presence of provincial finance secretaries, a proposal to restructure the present tax collection system and the financial devolution plan were discussed.
It was mainly a brainstorming session, with the objective of finding ways and means to enhance autonomy of the provinces in fiscal affairs of the federation.
The NRB invited comments on a proposal whether collection of some of the taxes could be left for the provincial governments as part of the government’s financial devolution plan, the source said.
The meeting also discussed at length the legal complexities or the constitutional amendments involved in altering the present system of tax collection, he said.
However, the predominant view that emerged at the meeting was that the government should achieve the objective without much tinkering with the constitution.