Just as expected!
The 8th NFC award has clearly hit a brick wall, although it is not much of a surprise considering how the ‘basic premise’ of the 7th award was missed. That the provinces would argue for more was more or less guaranteed – considering their balance sheets over the outgoing year – but the government’s inability to comply was just as certain. Again, the 7th award was built on the strategy to increase the tax to GDP ratio to approximately 15 per cent around this time. And since it continues to languish at 10 per cent – which, according to some, is still a liberal figure – there can be no consensus, and therefore – as per Constitution – no 8th NFC award.
The N-league, interestingly, is dealing with this phenomenon just as it would any other. Finance Minister Ishaq Dar, who naturally deals with such issues, has ordered a subcommittee of technical experts besides five ‘crucial studies’ to provide him with a better understanding of ground realities. And since such finding s take their sweet time coming, there’s a reason in itself for the president to extend the 7th award for another year.
The important question now, of course, is what the finance minister will do at budget time next year? He does not exactly have a reputation of meeting budgetary targets – especially tax and growth numbers – even though he does a decent enough job of getting the Fund, etc, agree to revised figures about half way into the fiscal. And some of the provinces’ concerns are genuine enough to ask for more funds. That, again, brings us right back to the matter of the tax net. Those with slightly long memories will remember how Mian sb made tax, along with electricity and security, the main items of his election campaign. The tax part at least, if not more, has left a little something to be desired. The ruling party is reminded that inability to earn enough brings compound difficulties in disbursing funds, which is why the country has to rely on borrowing for so much of its ‘operations’. Tax collection must improve. There is no other way.
