With the constitution of the
present National Finance Commission, the earlier N.F.C. stand dissolved with immediate
effect.
From SHAMIM AHMED,
RIZVI, Islamabad
Jul 31 - Aug 06, 2000
Yet another manifestation of General Pervez Musharraf's anxiety to
address the smaller provinces concern was available when he announced reconstitution of
National Finance Commission to review the award 2 years ahead of schedule in view of
demand of the smaller provinces of Balochistan and N.W.F.P.
A few days back Gen. Musharraf had announced at Quetta that less
developed areas in the country will get additional funds for their development programme.
Every area in the country will get its genuine right but the less developed areas will get
extra funds from development funds and these will be spent on their development
schemes", he declared while speaking at the inauguration of Rs. 1.5 billion (through
federal government special grant) power plant which will provide 39 megawatts electricity
power for the Mekran Division. Mekran was badly neglected in the past which has created a
sense of deprivation among the people of this area. With this project and some other
projects coming up in the area this feeling will be eliminated" he added also
announcing the postponement of Agriculture income tax from the farmers of Balochistan for
one year in addition to charging the old flat power rates for this period. He however,
said that government could not extend such relief for ever as it also needed money for the
development of the country and welfare of the people. He also indicated that his
government was alive to the demand of the smaller provinces to review the
NFC.
New NFC
A few days later President Rafiq Tarar, constituted an 11-member
National Finance Commission with the finance minister as its head to make recommendations,
among other things, regarding distribution of taxes between the federal government and the
provinces.
Besides recommending the distribution of net proceeds of various
government taxes, the commission will determine the ratio in which the distribution is to
be made. According to sources, the new taxes to be included for distribution are GST and
sales tax on services. The commission, which was set up during Farooq Leghari's caretaker
regime, stands dissolved with the setting up of the new commission.
In the previous commission, the share of the provinces was considerably
reduced and the federal government's share was enhanced to 72.5 per cent, while 37.5 per
cent was distributed among the provinces on population basis. The new commission will
consider the distribution of sales tax and tax on services as part of the federal pool.
Besides the commission would also consider the inclusion of other
federal taxes including customs duties and federal excises and deliberate on the issue of
grants-in-aid to the provincial governments.
A press release issued on Saturday night reads; the President in
pursuance of the Constitution of the Islamic Republic of Pakistan has constituted the
National Finance Commission (NFC). The Finance Commission consists of the following
namely.
Minister for Finance, Government of Pakistan. Chairman, Minister for
Finance government of Punjab. Member, Minister for Finance government of Sindh. Member,
Minister for Finance government of N.W.F.P. Member, Minister for Finance, government of
Balochistan Member, One member from each provinces to be notified in consultation with the
governors of the provinces; Members Secretary General Finance government of Pakistan,
Finance Secretary, government of Pakistan Official Expert.
The terms of reference (TRO) for the commission are:
A. The distribution between the Federation and the
Provinces of the net proceeds of the following taxes:
i) Taxes on incomes including corporation tax but not
including taxes on income consisting of remuneration paid out of the Federal Consolidated
Funds.
ii) Taxes on the sales and purchases of goods,
imported, exported, produced, manufactured or consumed.
iii) GST on services;
iv) Consider the inclusion of other Federal Taxes
including Customs Duties and Federal Excises, but not including taxes on income paid of
Federal Consolidated Funds.
B. The making of grant-in-aid by the Federal
government to the Provincial governments.
C. The exercise by the Federal government and the
Provincial government of the borrowing powers conferred by the constitution.
D. Examine the question of rationalization of payment
of royalties on crude oil, one of surcharge of natural gas collected by the Federal
government to the Provincial governments.
E. To consider review of the distribution of share of
taxes between fiscal discipline at the Federal and Provincial levels and for ensuring
consistency in maintaining an appropriate fiscal balance at the consolidated level.
F. Any other matter relating to finance referred to
the commission by the President.
With the constitution of the present National Finance Commission, the
earlier N.F.C. stand dissolved with immediate effect.
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