ISLAMABAD: The 7th National Finance Commission (NFC), which met here on Thursday with Finance Minister Shaukat Tarin in the chair, included in its terms of reference (ToRs) many contentious issues, including impact of the war on terror in the NWFP and Balochistan, net hydel profit, petroleum levy, general sales tax on goods and services, etc., that will ultimately decide the complexion of the next NFC award being regarded as critically important: both financially and politically for the federation.
The deliberations on this expanded and agreed agenda will kick off on Friday. Sindh Chief Minister Syed Qaim Ali Shah, who also holds the portfolio of Finance Minister, Balochistan Finance Minister Mir Muhammad Asim Kurd, NWFP Finance Minister Mohammad Humayun Khan, Punjab Finance Minister Tanvir Ashraf Kaira, Member (NWFP) Senator Haji Mohammad Adeel, Member (Sindh) Kaiser Bengali, Member (Punjab) Ghafoor Mirza and Member (Balochistan) Dr Gulfaraz Ahmed attended the first meeting of the reconstituted National Finance Commission.
All burning issues, from provincial perspective at least, have been included in the agenda of the National Finance Commission such as the adverse impact of ongoing war on terror in the NWFP and Balochistan, net hydel profit, petroleum levy, general sales tax on services (railways, telecommunication and Pakistan Airline’s tickets) and goods while the GDS (gas development surcharge) is already in the fold of NFC,” Syed Qaim Ali Shah flanked by Shaukat Tarin and representatives of other provinces told the media after the meeting. In the meeting every province has been allowed to include one more expert in the National Finance Commission.
He also said, “We — the provinces — have in the meeting asked the Centre to exactly let us know about the volume of the kitty it holds and brief the four federating units on Friday on the actual financial resources of the federal government and how much of it is included in the federal divisible pool (FDP) so that the four units could rehash their demands in the FDP accordingly for next five-year NFC award.
The meeting decided that the subsequent NFC sittings would be held in Quetta, Peshawar, Karachi and Lahore and then in Islamabad. The first two meetings have been agreed to be held in Balochistan and the NWFP so that the sense of deprivation in smaller provinces could be curtailed.
“On every issue, a sub-committee will be constituted that will recommend its finding to the NFC and most probably by September 30, the NFC award will be agreed with concusses,” Shah said. Punjab Finance Minister Tanvir Ashraf Kaira said his province has asked for inclusion of the petroleum levy in the terms of references, as Lahore wants its inclusion in the FDP.
To a question as to whether Punjab is agreed on the talk about 20:80 ratio of population and other factors as basis of the next multi-criteria financial distribution mechanism between the federating units, he said Punjab is open and ready to show flexibility to accommodate other factors as basis of the next formula, but his province wants judicious distribution of resources.
Finance Minister Shaukat Tarin said: “We have overcome the bitterness of all the four provinces pertaining to ToRs by including their issues in the agenda as the commission wants to discuss everything in detail.
“We are open to everything and for next mechanism of distribution of financial resources, the centre and big provinces would have to come forward and sacrifice to accommodate others,” Tarin said. “This will help minimise the sense of derivation of small province.”
“We have in the meeting sequenced the process of the NFC and to this effect the federal government would first give to the provinces the presentation on Friday on its financial resources and then provinces will crave out their demands accordingly. After Friday’s meeting, next NFC meeting will be held in Quetta.
Tarin claimed the next NFC award will be announced before September 30, but we want consensus on the award and it may get delayed by one or two weeks. On the question of inclusion of profit of the Stat Bank in the federal divisible pool, he said more items could also be included in the ToRs. To a question, he said the commission will not discuss the central excise duty; rather, it would take up the whole chapter of general sales tax on both services and goods.
Member (NWFP) Haji Adeel along with his provincial Finance Minister Humayun Khan said Shaukat Tarin has been very kind and included all related issues of ‘Pakhtoonkhwa’ in the agenda.
To a question, he said his province wants compensation of adverse impact of war on terror amounting to $2.5 billion (Rs207 billion), Rs251 billion in the head of net hydel profit as per the decision of the Arbitration Tribunal and Rs1 billion as water uses.
He said other provinces are using three million acre feet of water from the share of the NWFP every year and Peshawar also wants compensation in this regards. He said the commission would consider poverty and low literacy rate of the NWFP in the discussion.
Adeel said Finance Minister Shaukat Tarin seems inclined to resolve all the outstanding issues of the provinces pertaining to the NFC and in case our impression goes wrong then Peshawar is not far away as we will go there and make strategy to achieve goals.
Balochistan Finance Minister Mir Mohammad Alam Kurd Gilloo said: “We are being given just Rs47 billion from Rs360 billion resources under the divisible pool. The amount that is given to us is too small.
“The issue before us is how to bring Balochistan at par with other provinces and for this the NFC will have to come up with a strategy.” He said Balochistan wants area, poverty and backwardness as basis of the next new mechanism of financial resources distribution.
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