The federal government has notified eight committees under the National Finance Commission (NFC) to work on key issues for the 11th NFC award, following a legal opinion from the attorney general supporting the Centre against Sindh’s objections, The Express Tribune reported.
The Ministry of Finance constituted the committees to address issues including debt utilisation, sharing of federal expenditures incurred in provincial subjects, tax composition of the divisible pool, and distribution of resources between the federation and provinces.
A working group headed by Punjab’s finance minister has been tasked with making recommendations on sharing federal expenditures in areas that fall under provincial jurisdiction. The group was formed after the attorney general opined that such matters fall within the NFC’s scope, rejecting Sindh’s contention.
Another working group, headed by Finance Minister Muhammad Aurangzeb, will review the composition of taxes included in the divisible pool. Sources said the federal government is seeking to exclude customs duties from the pool shared among the five governments.
A separate committee will examine vertical transfers between the Centre and provinces. At present, provinces receive 57.5% of the divisible pool. In the last fiscal year, the federal government collected over Rs1.2 trillion through the petroleum levy, while provinces generated a combined cash surplus of Rs921 billion to meet IMF programme conditions.
A working group led by the Balochistan finance minister will recommend how resources are distributed among the four provinces. Currently, more than 82% of inter-provincial distribution is based on population.
The finance ministry has also notified a committee to propose measures to improve the tax-to-GDP ratio, which will be chaired by the Khyber Pakhtunkhwa finance minister. Another group, headed by the Sindh finance minister, will examine straight transfers of resources to provinces.
A seventh working group, also led by the Khyber Pakhtunkhwa finance minister, will make recommendations on the merger of the former FATA and its share in the NFC.
An eighth committee has been formed to deliberate on national debt composition and utilisation, with the Balochistan finance minister appointed as its chair.
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