- Curtain raiser
Now that Finance Minister Asad Omar has raised the curtain on the 9th NFC award, it will soon become apparent whether or not the present government can give out-of-the-box solutions to problems that have plagued the issue since the 18th amendment. Little more than going through the motions was expected from the first meeting on Wednesday. And, sure enough, everybody was given yet another primer on issues that have not been overcome till now, and committees were formed, six this time, to handle the more important problems.
First and foremost, of course, is the matter of the divisible pool. Clearly the federal government has had a hard time of it trying to pay the bills from its share of 42.5pc of the taxes. And since federal expenses are not going down anytime soon, and it has had to meet its need through incessant borrowing, the 9th Award is faced with the same basic starting problem as the 7th. And provinces can demand more tax collection rights all they want, but this matter too has stayed where it was all those years ago. Back then, when taxes were being transferred to provinces, some questioned how they would do it considering they have no training in such matters. It was suggested that the FBR provide training to the provinces. But the Bureau’s own performance since then has ruled out any possibility of progress.
There’s also the matter of the failures of the last award as members try to hammer their way to a consensus. The biggest misses of the 7th Award began with taxes – which instead of rising to targetted 15pc of GDP by 2015 and incorporating an annual 1pc increase subsequently, made only 11pc in five years. Then there was failure to maintain fiscal discipline. In terms of expenditure against revenue, provinces recorded average negative fiscal growth of 16pc and the centre a negative 13pc. That’s hardly a comfortable position to start from. But now that fresh ground has been broken, the government will soon confront the usual stumbling blocks. That is when its ability will be tested.
