11th National Finance Commission Constituted in Pakistan to Address Revenue Sharing
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Islamabad – President Asif Ali Zardari has initiated a critical process for Pakistan’s fiscal future by establishing the 11th National Finance Commission (NFC) on Friday. this commission will determine the new formula for distributing federal divisible resources among the nation’s provinces.
Commission Leadership and Membership
Finance Minister Muhammad Aurangzeb will chair the newly formed NFC.The commission’s membership includes the finance ministers from each of Pakistan’s four provinces: Punjab, Sindh, Khyber Pakhtunkhwa, and Balochistan. Representing each province are Nasir Mahmood Khosa (Punjab), Asad Sayeed (Sindh), Dr.Musharraf Rasool Cyan (Khyber Pakhtunkhwa), and Farmanullah (Balochistan).
The commission’s mandate,as outlined in a notification from the Finance Division,centers on recommending a distribution framework for the ”net proceeds of the taxes” detailed in clause (3) of article 160 of the constitution.
Tax Categories Under Review
The taxes subject to review encompass a broad range of revenue sources. These include income taxes-excluding remuneration from the Federal Consolidated Fund-taxes on the import, export, production, manufacture, and consumption of goods, export duties on cotton, specified excise duties, and othre taxes as designated by the president.
The NFC will also advise the president on federal grants-in-aid to provincial governments and the exercise of borrowing powers as defined by the Constitution.
Did You Know? …
The NFC plays a pivotal role in balancing the financial needs of the federal government with those of the provinces, impacting progress and service delivery across the country.
Broad Scope of Recommendations
Beyond revenue distribution, the commission will address financial implications related to provincial responsibilities, trans-provincial matters, national projects requiring shared funding, and any other financial issues referred by the president. This complete scope underscores the NFC’s importance in Pakistan’s financial governance.
Past Context and Current Challenges
policymakers and political leaders have long discussed revising the revenue-sharing formula to strengthen the federal government’s financial standing. The 10th NFC expired on July 21st, and the current 7th NFC Award has been in effect for nearly fifteen years-substantially exceeding its intended five-year term.
The extension of the previous award has been attributed to disagreements between the provinces and the federal government regarding the new formula. The 18th Amendment to the Constitution safeguards provincial shares, stipulating that any future award cannot reduce a province’s share below its previous allocation.
NFC Awards: A timeline
| NFC Award | Years in Effect |
|---|---|
| 7th NFC | Approximately 15 years (extended annually) |
| 10th NFC | Expired July 21st |
| 11th NFC | To be determined |
The establishment of the 11th NFC signals a renewed effort to address these longstanding financial challenges and establish a lasting framework for resource allocation.
Pro Tip: …
Understanding the NFC process is crucial for anyone interested in Pakistan’s economic policy and intergovernmental relations.
What impact will the new NFC award have on provincial development budgets? And how will the commission navigate the constitutional protections afforded to provincial revenue shares?
The National Finance Commission has been a cornerstone of Pakistan’s fiscal federalism since its inception. historically, these commissions have grappled with balancing the need for equitable resource distribution with the federal government’s requirements for national development and security. The ongoing debate over the revenue-sharing formula reflects deeper structural issues within Pakistan’s economy, including regional disparities and the relative fiscal capacities of the provinces. future NFC awards will likely need to address emerging challenges such as climate change adaptation and the increasing demand for social safety nets.
frequently Asked Questions about the NFC
- What is the primary role of the National Finance Commission? The NFC determines the distribution of financial resources between the federal government and the provinces.
- What is Article 160 of the Constitution? This article outlines the taxes whose proceeds are divisible between the federation and the provinces.
- How does the 18th Amendment affect the NFC process? The 18th Amendment guarantees that no province will receive less than its previous share in any future NFC award.
- Why has the 7th NFC Award been extended for so long? disagreements between the provinces and the federal government over the new formula have led to annual extensions.
- What are grants-in-aid? These are financial assistance provided by the federal government to provincial governments.
Stay tuned to world-today-news.com for continuing coverage of this developing story and its implications for Pakistan’s economic landscape.
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