The present debate on the National Finance Commission (NFC) Award is overwhelmingly skewed against the provinces and thereby presents a myopic perspective of the issue. In the absence of a critical discussion of the NFC, the centre’s demand for a greater share of the divisible pool will inevitably seem the only plausible option, given that it has to fund the military, service debts, and finance national projects.

 The accusation that the provinces are rent-seekers, content to milk Islamabad and contributing little in return, misreads the purpose of Article 160 of the Constitution of Pakistan, 1973, and consequently debases the nature of the contributions the provinces make towards national development.

The codification of the provision requiring the federal government to distribute funds to the provinces from the divisible pool in Article 160 recognises a structural reality: the federal government holds the power to raise revenue through an eclectic range of taxes — income tax, sales tax on goods, customs duties, federal excise, corporation tax, capital value taxes, and taxes on mineral oil and natural gas and certain other minerals, as well as through various non-tax levies, such as the petroleum levy.

By contrast, the provinces do not have the power to tax nearly as many subjects as the centre does under the Constitution. Yet they bear the primary burden of making public investments in areas that drive national socio-economic development: the........

© The Friday Times