ISLAMABAD              -           National Finance Commission (NFC) monitoring committee on Thursday has approved the composition of National Tax Council (NTC)—platform for provincial and federal tax collection. NFC monitoring committee chaired by Adviser to the Prime Minister on Finance and Revenue Dr.Abdul Hafeez Shaikh has also approved Terms of reference (TOR) for NTC. Provinces are represented in the National Tax Council and it shall enable them to decide collectively the rate for sales tax for both goods and services. It was proposed during the meeting that the National Tax Council shall meet at least once in every quarter and the recommendations of the NTC shall be expressed in terms of majority and shall be placed before NFC Monitoring Committee.

The International Monetary Fund (IMF) had also asked Pakistan for harmonisation in the tax system and creation of a single tax base as it directly impacted on the ease of doing business and went a long way in creating an enabling business environment and boosting confidence of the investors and businessmen. According to the IMF Pakistan had a continental size economy, much like the Western Europe where everybody had the same definition of the tax rate and services, and the same could be achieved in Pakistan through uniform tax rates and a single tax administration instead of two or three tax authorities in each province.

NFC monitoring committee was also attended by provincial Finance Ministers of Khyber Pakhtunkhwa and Balochistan while Punjab and Sindh were represented by their Finance Secretaries. The meeting was convened to seek approval of the bi-annual report on the implementation of the NFC Award for the periods of July –December 2018 and January – June 2019 and the establishment of the National Tax Council (NTC). The reports which were approved by the NFC monitoring Committee shall be presented in the National and Provincial Assemblies under the requirements of the Article 160 (3B) of the Constitution. The bi-annual reports contain the information on Distribution of Revenues and Grants in Aid to the provinces under NFC Award announced in 2010 (7th NFC Award).  The report also contained the inputs from the provinces. The reports were endorsed by the provinces.

The Bi-Annual Report of Period July- December (FY 2018-19) stated that out of FBR’s divisible pool collection of Rs1949.752 billion, Rs1121.207 was the provincial share. Punjab had Rs580.061 billion, Sindh Rs275.232 billion, KP Rs163.906 billion, Balochistan got Rs101.909 billion. In addition to these transfers KPK received 1% as war on terror fund of Rs19.694 billion, Balochistan additionally Rs10.149 billion and Sindh OZT grant Rs7.399 billion. Straight transfers for the period were Rs48.225 billion.

In addition to the divisible pool funds, Rs19.708 bn were given to KPK for WoT, Balcohistan additionally received Rs10.079 billion and Sindh got OZT grant of Rs7.404 billion. Straight transfers of Rs46.826 were also made to the provinces during the period under four heads of royalty on crude oil, royalty on natural gas, gas development surcharge and excise duty on Natural Gas.  During the meeting suggestion were also presented for sales tax harmonization in Pakistan. Pursuant to the decision of CCI dated 24th November 2017, the framing of ToRs of the Fiscal Coordination Committee (FCC) was assigned to the NFC Monitoring Committee. The said ToRs were framed and approved in meeting. The terms of reference state the FCC shall review and discuss the fiscal policy issues of the federal and provincial governments and suggest solutions. It will monitor current and development expenditures of the federal and provincial governments.