ISLAMABAD: Former Senate chairman Raza Rabbani has alleged that some members of the federal cabinet are attempting to build a case for reducing the provinces’ share in the National Finance Commission (NFC) Award.
He said such attempts by certain federal ministers to seek reforms in the NFC Award are in violation of the Constitution of 1973. “They contend that after transferring the provinces’ share from the Federal Divisible Pool, the federation is left with only enough funds to meet debt servicing and defence expenditures. This forces the federal government to rely on borrowing,” he said in a statement on Tuesday. Rabbani referred to Clause (3A) of Article 160 of the Constitution 1973, which provides that the share of the provinces in each NFC Award shall not be less than the share given to them in the previous award. He said the solution does not lie in reducing the provincial share. Instead, it requires procedural tax reforms, broadening the tax base, eliminating exemptions, improving enforcement, and ensuring sustainable revenue generation. He stressed the need for structural reforms at the federal level to ease pressure on public finances and said the federal government must rationalize its institutional footprint by withdrawing functions that were devolved to the provinces under the 18th Amendment.
Rabbani said the Federal Board of Revenue (FBR) missed its projected collection target by Rs429 billion during the first eight months of fiscal year 2025-26. The government of Sindh has pointed out that there is a potential of Rs11 trillion through GST collection on goods, whereas the FBR collects only Rs1.6 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 provincial share. He said if the federal government is facing difficulties in tax collection, the responsibility can be transferred to the provinces.
