Sep 07 - 13, 2009

While political climate abounds with voices of revenges to settle personal score, and tenuous retrospections, the belated national wealth sharing accord known as national finance commission is gathering heap of dusts to cause fiscal malfunctions, which otherwise are controllable in case of demonstration of political maturity by all political parities to come to resolve issues affecting public in real time.

According to some news reports, Punjab wants restoration of 1991 award that set 20 percent federal and 80 percent provincial shares in federal tax pool. To some extent, 1991 award was appropriate, but this made population as single basis of vertical and horizontal distributions, says Sindh's ex-finance minister, Syed Sardar Ahmed who maintains low profile in media. He says multiple criteria should be considered for resources distribution. In order of priority, population, revenue, poverty, and area must be given due weightage, tells MQM's senior parliamentarian in Sindh Assembly to this scribe.

Federal government has constituted two committees recently to reach a consensual distribution formula. First committee is tasked with to determine allocation of resources from centre to provinces- vertical distribution. Second is responsible to reach a unanimous decision agreed by all four provinces about how resources be shared among provinces- horizontal distribution. These committees are also taking inputs from non-government economic experts, and those with previous involvement in NFC awards making, nominated from each province.

Dr. Qaiser Bengali was nominated as non-statutory member representing Sindh. He says announcement of next award depends on political decision. "NFC award may spring up in five minutes or take five years. All depends on agreement or disagreement on distribution formula," Dr. Qaiser adds. According to him, Punjab does not seem to withdraw from its congenital demand of population based resources distribution. "Till last NFC meeting, delegation from Punjab showed no indication of flexibility," he says, denying the reports that Punjab has conceded its demand.

When asked about private members' influence in NFC meeting, he said I did not know what the legal status of being a non-statutory member was. But, he has presented Sindh's case before the first statutory dialectic on NFC as private representative from Sindh. There are other non-statutory members each from Punjab, Frontier, and Balochistan as well. If political leadership of Punjab shows flexibility, the issue would be resolved soon, believes Doctor. "Now, ball is in Punjab's court."

Province of Punjab has a largest population in Pakistan and therefore aspires for largest share in resources. Advocates of population-based distribution formula argue that Punjab's per capita income is Rs3000, lowest among all provinces. They refer last NFC award of 2006 to support their arguments and population census of 1998. Dr. Qaiser Bengali says, "Every one knows taxes are generated mainly from central Punjab and Karachi". "In two, Karachi's contribution is highest." NFC award 1997 incorporated four taxes. Before this, only two taxes were the part of 1990 award. The taxes include income tax, wealth tax, custom duty, and sales tax.

Productive bases are concentrated in Karachi and central Punjab and hence taxes collections are from these bases. "The purpose of distribution formula should be to share resources collected through taxes with territories which do have low tax generation capacity and that should be based on multiple criteria," urges Dr. Qaiser. 'Sindh has suffered Rs.196 billion because of errors in NFC award in last 10 years.'

"All problems lie in centralization. Provincial autonomy may sideline petty discussions on resources distribution, which linger on since decades. NFC on multiple criteria is fine, but there would inevitably emerge conflict when one invokes 160 and 161 articles of constitution 1973. Provincial autonomy is constitutionally guaranteed," says Zulfiqar Halipota, Secretary Sindh Democratic Forum- a think tank of writers. "We want federal-province wealth distribution in accordance with international principles. We demand dismissal of concurrent list and a new social order according to basic democratic spirits." NFC is about fiscal autonomy, spells out Dr. Qaiser. He says not all taxes but some of them such as excise duty and personal tax can be devolved.

GST on services is provincial subject and GST on goods is federal subject, he answers what is the constitutional status of general sales tax. "Demand of Sindh is to transfer collection authority of GST on services to provinces." Services include telecommunication, electricity, gas, etc. He says that alternatively it may be a subject to point of origin, which implies distribution in proportion to collection. Zulfiqar Halipota says that NFC is a matter of parliamentary discussion and strokes of president's signature should not decide its fate. Under the Constitution, the president has the privilege to amend distribution of revenues as may be necessary or expedient. Parliamentarians of PPP and MQM are complacent on Sindh's rights and their stance is compromising, laments he. "Not like this. Compromise is a need", defends PPP's stalwart Dr. Qaiser. 'Look, advantage of democracy is that issues are resolved politically. In past, dictations from unelected cronies decided about what would be the share of for example Balochistan in resources or that reshuffled formula at will. But, now people-elected parliamentarians would come to a conclusion on NFC.'

Missing consensus among provinces is prolonging materialization of NFC award, which last time was announced in 2006. However, critics rejected that NFC as one-man-made and groundless since it came under dictator rule and was an interim award, which showed the provincial disagreement on formula of resources distribution to federating units from federal tax pool. The disagreement resulted in arrival of temporary solution at that time according to which the share of provincial governments in the divisible pool would rise every year to 41.5 percent, 42.5 percent, 43.75 percent, 45 percent, and 46.25 percent. It was a caretaker government that announced NFC award 1997 that was also rejected as unconstitutional. According to NFC 1997, the share of federal government was 62.5 percent and provinces 37.5 percent. After 1997 award, next was to be announced in 2002 since five-year interval was decided for NFC award announcement. It did not happen.