ISLAMABAD: Former Chairman Senate Mian Raza Rabbani on Tuesday criticised what he descried as attempts by certain members of the federal cabinet to build a case for the reducing of the share of the Provinces and reforms in the National Finance Commission (NFC) Award, terming the move unconstitutional.
In a statement, he said Clause (3A) Article 160 of Constitution stipulates that the share of the Provinces in each NFC Award shall not be less than the share given to the provinces in the previous Award.
“Any such attempt by certain federal ministers is in violation of the Constitution, 1973. They contend that after transferring the Provinces’ share from the Federal Divisible Pool, federation is left with only enough money to finance debt servicing and defence expenditure. This forces the Federal Government to rely on borrowing”, he said.
However, Mr Rabbani maintained that the solution does not lie in reducing the provincial share but in undertaking fiscal reforms. These include procedural tax reforms, broadening the tax base, eliminating exceptions, improving enforcements and sustainable revenue generation.
He further stressed the need for external reforms at the federal level to ease pressure on public finance, adding that the federal government must rationalise its institutional footprints by withdrawing functions that the 18th Amendment has devolved to the provinces.
Referring to revenue performance, Mr Rabbani said the Federal Board of Revenue (FBR) missed its projected collection target by Rs.429 billion during the first eight months of fiscal year 2025-26.
He also cited the Government of Sindh, which has pointed out that there is a potential of Rs.11 trillion in General Sales Tax (GST) collection on goods, whereas, the FBR only collects around Rs.1.6 trillion annually.
“The collection of GST on goods should be transferred to the provinces. in the event of a shortfall from the agreed benchmark, deductions could be made from the share of the Provinces”, he suggested.
Mr Rabbani added that if the federal government was experiencing difficulties in tax collection, the same can be given to the Provinces.
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