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Punjab’s flexibility paved way for consensus: Tareen: Four-point criteria to decide NFC Award

* Finance minister says tax collection, generation will be discussed on Dec 9
* Govt plans to increase federal revenue

By Razzak Abro

KARACHI: The National Finance Commission (NFC) has agreed on four-point criteria, including population, backwardness, inverse population density and revenue.

Federal Finance Minister Shaukat Tareen announced this on Thursday while briefing reporters at the conclusion of a two-day NFC meeting. Finance ministers of Punjab, the NWFP and Balochistan were also present.

Tareen, also the NFC Award chairman, said, “The credit goes to Punjab, which showed flexibility on factors other than population in the distribution of resources.”

The finance minister said all stakeholders had agreed to create a ‘war on terror fund’ to help the war-torn NWFP. He said the fund was being set up considering the war could continue until three to four years. “It is not ending in six months,” he said.

The announcement came on the day when the chief ministers of Punjab, the NWFP and Balochistan were present in the city. They attended receptions hosted by Sindh Chief Minister Qaim Ali Shah and Sindh Assembly Speaker Nisar Ahmed Khuhro.

Tareen said the proportions of the fourth factor of the award – revenue – were yet to be decided as it had two components, the revenue collection and generation.

Forthcoming meeting: He said it had been decided that the tax collection and generation would be discussed in the forthcoming meeting scheduled for December 9 in Lahore.

“A practical formula would be figured out about the proportions of this factor in the Lahore meeting,” he said. “It can be revenue collection or generation, or something in between.”

Tareen said the percentage of distribution of resources under the four factors would also be decided in the forthcoming meeting of the NFC.

He said the NFC had to finalise the horizontal distribution of resources – share among the provinces – before finalising the vertical distribution – share between the federation and the provinces.

Increase: He said the federal government had planned to increase the federal revenue from 8.8 percent to 13.9 percent, adding that it would reach more than 15 percent when the provinces would each contribute 1.1 percent to it.

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