LAHORE: The Centre and the provinces have finally achieved a landmark consensus on the 7th National Finance Commission Award, amid rare applauses and praises for each other.
In marathon negotiations spanning over three days in Lahore, not only the Centre sacrificed its share under the vertical arrangement in an endeavour to give additional financial incentives to the provinces but also the Punjab showed flexibility on contentious issues under the horizontal inter-provincial sharing of resources.
Talking to media persons at the conclusion of parleys here on Friday evening, Finance Minister Shaukat Tarin, who is also chairman of the 7th NFC Award, said the provincial share of the divisible pool would increase from the present 47.5 per cent to 56 per cent in the first year of NFC (2010-2011) and 57.5 per cent in the remaining years of the award under the vertical distribution of resources. He claimed that this share would virtually be over 60 per cent.
Tarin said the Centre recognised the needs of the federating unites for a larger share in the divisible pool, as they are assigned the task of providing basic services like health, education, water supply and sanitation to the masses. He said the size of the divisible pool was proposed to be increased in the national interest and provincial harmony.
“The federation will become stronger if the provinces achieve the financial autonomy and become more powerful,” he added. Accompanied by the four provincial chief ministers and the finance ministers, Tarin told journalists the federal government has agreed to cut tax collection charges from 5.0 per cent to 1.0 per cent and this amount would also be added to the divisible pool. About the thorny issue of sales tax on services, he said the NFC recognised sales tax on services as a provincial subject and it mightbe collected by the respective provinces. He said the federal government was aware of its responsibilities and it would make all efforts to boost the tax revenue. “We are increasing tax collection and trying to reduce expenditures in order to provide more and more funds to the provinces,” he added.
About the horizontal distribution among the provinces , he said the Punjab would now get 51.74 per cent, Sindh’s share will be 24.55 per cent, the NWFP will receive 14.62 per cent share while Balochistan will get 9.09 per cent.
About the break-up of unprecedented multiple indicators and their weightages, the finance minister said population will be given 82.0 per cent weightage, poverty/backwardness 10.3 per cent, revenue collection/generation 5.0 per cent and inverse population density 2.7 per cent.............
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