The federal government withheld Rs56.6 billion of the provincial governments under National Finance Commission (NFC) award during six months (July-December) of the current fiscal year.
The federal government released Rs868.12 billion to the four provincial governments instead of projected amount of Rs924.7 billion during July-December period. The federal government withheld Rs56.6 billion of the provinces despite improvement in the tax collection of the Federal Board of Revenue.
The tax collection shortfall of the FBR came down to Rs5 billion during July-December period of the financial year 2015-2016 from Rs40 billion of the July-September. The FBR collected Rs1385 billion during first half of the ongoing financial year as against the target of Rs1390 billion. However, the federal government still deprived provinces of their rights by not releasing full funds. “We will lodge our protest against the federal government for not giving us our due right, which is creating financial constraints for the province,” said an official of the Sindh government while talking to The Nation.
He further said that Sindh would raise the issue in the upcoming meeting of Council of Common Interests (CCI) to be held on February 29 under chair of Prime Minister Nawaz Sharif.
According to the official documents of the Ministry of Finance, the Punjab government received Rs415.6 billion during July-December, which is 46.5 percent of its budgeted share of Rs894.7 billion. Meanwhile, Sindh received Rs227.06 billion or 47 percent of its share of Rs482.8 billion. Similarly, Khyber-Pakhtunkhwa (KP) received Rs140.02 billion or 46.6 percent of its annual share of Rs300.4 billion. Balochistan got Rs85.4 billion or 49.8 percent of its annual share of Rs171.49 billion.
The PML-N government has already extended the previous resource sharing formula for one year. The previous NFC award had expired on June 30, 2015. The provincial governments are getting their shares from the federal government under the 7th NFC award on the following formula: Punjab 51.74 percent, Sindh 24.55 percent, Khyber Pakhtunkhwa 14.62 percent and Balochistan 9.09 percent.
Sources in the Ministry of Finance informed that government would start constituting new NFC award. “Going forward, it will be important for the government to seek a better balance in the demarcation of revenue and expenditure responsibilities and encourage improvement in provincial revenue collection. Staff also urged the authorities to reduce fragmentation in tax administration and improve cooperation with provincial tax authorities”, the IMF noted in its report regarding Pakistan.