ISLAMABAD; President Asif Ali Zardari on Friday constituted the 11th National Finance Commission (NFC) to work out a fresh award for the distribution of federal divisible resources between the Centre and the provinces.
According to a Finance Division notification, the commission will be chaired by Finance Minister Muhammad Aurangzeb and include the four provincial finance ministers. Other members are: former bureaucrat Nasir Mahmood Khosa (Punjab), economist and researcher Asad Sayeed (Sindh), former bureaucrat Dr Musharraf Rasool Cyan (Khyber Pakhtunkhwa), and Farmanullah (Balochistan).
The NFC has been tasked to recommend to the president how the net proceeds of taxes listed under Article 160(3) of the Constitution should be shared between the federation and provinces. These include income taxes (excluding salaries from the Federal Consolidated Fund), sales taxes on goods, certain export duties such as cotton, excise duties, and other taxes specified by the president.
The commission will also advise on federal grants-in-aid to provinces, borrowing powers of the Centre and provinces, and cost-sharing of federal or provincial expenditures, including those related to national and trans-provincial projects. The president may also refer any other financial matters to the commission.
Policymakers have long debated revising the revenue transfer formula to address the federal government’s fiscal challenges. The 10th NFC expired on July 21, while the 7th NFC Award—originally meant for five years—has remained in effect for nearly 15 years. Successive extensions were given due to Centre-province disagreements over a new formula.
Under the 18th Amendment, provinces’ shares were given constitutional protection, ensuring that no province receives less than its previous share in any future award.
