KARACHI: The National Finance Commission on Thursday arrived a decision in principle to base the NFC award on a multiple criteria which would include revenue, backwardness, population and inwards population density besides contribution from the provinces and federation to create a fund to compensate NWFP for losses of war against terror.
The Commission had a marathon session on Thursday held under the chairmanship of Federal Finance Minister Senator Shaukat Tarin and ended with the decision to hold the next meeting in Lahore on December 9 and 10.
The Chief Ministers of the four provinces also participated this important meeting.
Later, Shaukat Tarin told press briefing that in the Lahore meeting the NFC will calculate the weightages of various factors suggested by the provinces and said even in terms of percentages, the provinces would get more.
‘There is good progress made on horizontal distribution and we would complete the work on vertical distribution also in Lahore meeting’.
Shaukat Tarin, who was flanked by Punjab Finance Minister Tanveer Kaira, Balochistan Finance Minister Dr Asim Kurd, Senator Adil representing NWFP as technical expert, Dr. Kaiser Bengali (Sindh), said the participants discussed in detail the horizontal distribution of divisible pool and in case of any loss the same would be compensated under vertical distribution formula.
Tarin said positions of the provinces on horizontal distribution are very strong which need more work and refining.
He said there was consensus between the provinces and the Federation that NWFP be compensated for the losses in war against terror and it was decided that a fund would be created before horizontal distribution of the resources.
Hence, Federal Government would contribute more in the fund by cutting its expenses, he added.
Referrring to revenue based distribution criteria, Shaukat Tarin informed that two grounds i.e. revenue collection and revenue generation came up for discussion and both the positions were very valid.
‘We would collect data in this regard to reach a practical formula’, he stated.
He said in the Lahore meeting the horizontal distribution will be finalised which was left open for adjustment, if needed.
The Federal Finance Minister said the Federation would be trying to cut its expenses and divert more resources to the provinces.
It would also increase its revenue including enhanced tax-GDP ratio, set at 13.9 per centage, within next 6 years. This year the target is 10.6 per cent, he added.
‘We would have to enlarge the ‘cake’ for big share from divisible pool to all stakeholders,’ he remarked adding that for this purpose ‘we have to adopt various techiques and stratagies’.
Replying a question Shaukat Tareen explained that as far as VAT or GST was concerned, only one of them would be levied at one time with provincial tax going to provinces and Federation’s tax to federation.
In Conclusion the Finance Minister had all praise for the Provinces for showing flexibility and particularly the Punjab which showed magnanimity. ‘All the provinces made compromises on many things,’ he said.