Sindh points out deviation from NFC criteria

Courtesy: Dawn

KARACHI: Sindh has lodged a formal protest with the federal government over what it termed deviation from the recommendations of the 7th National Finance Commission (NFC) Award, sources in the federal ministry of finance told Dawn.

The provincial government has complained that some key recommendations of the award relating to the multiple criteria and sales tax on services had been omitted from the President’s Order No 4 of 2010.

It has warned that if agreed amendments were not incorporated in the order Sindh might decide to distance itself from the award, sources maintained.

The provincial government has taken up the matter with President Asif Ali Zardari and Prime Minister Yousuf Raza Gilani pointing out that the critical omissions had been made in the president’s order in gross violation of spirit of the NFC award signed at Gwadar.

In a communication the Sindh government lodged a strong protest for such changes in the original document.

It maintained that the consensus was achieved for the first time to include multiple indicators in the criterion for horizontal distribution amongst the provinces but the same was omitted from the presidential order.

Under the multiple indicators for distribution amongst the provinces it was agreed that population will have 82 per cent, poverty and backwardness 10.3 per cent, revenue collection and generation 5 per cent and inverse population density 2.7 per cent.

However, the central recommendation of the NFC award related to multiple criteria had been deleted from the president’s order, which is a major deviation from the agreed parameters with respect to population, poverty, revenue collection and generation and inverse population density.

The Sindh has also raised the issue with regard to collection of sales tax on services and pointed out that there is a specific recommendation of the award, which states that NFC recognises that sales tax on services is a provincial subject under the Constitution of Pakistan, and may be collected by respective provinces, if they so desire.

Consequently, deletion of both basic recommendations is a major deviation from the entire spirit of the NFC award and is contrary to the interest of Sindh and both these need to be incorporated fully in the president’s order.

The highest authority of the province has also protested over the clause No 3 of the president’s order and believes it is also a major deviation from the nomenclature of taxes as given in the Constitution.

The provincial government, while registering its protest in the strongest words, has sought urgent amendment to the president order No 4 by incorporating the signed recommendations of the award, sources said.

As a result of this development the fate of the Value Added Tax (VAT) proposed to be enforced from the next fiscal hangs in balance because it could only be implemented after all provincial assemblies and the National Assembly pass the bill.

Thursday, 01 Apr, 2010

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