In Pakistan, tax laws are meant only to fleece the poor for the luxuries of the rich. The privileged classes pay no taxes on their colossal incomes and wealth but the poor are subjected to all kinds of oppressive taxes. Adding insult to injury, they get nothing in return—even deprived of protection to their lives and property, what to speak of basic facilities of health, education, transport and housing.
The privileged classes (who are greedy and ruthless) pay no taxes on their colossal incomes and wealth but the poor are subjected to all kinds of oppressive taxes. Adding insult to injury, they get nothing in return—even deprived of protection to their lives and property, what to speak of basic facilities of health, education, transport and housing.
Also Read: NFC Award: Challenges & Solutions-I
In the wake of expiration of 7th NFC Award, the federal and provincial governments failed to evolve a consensus due to belated start of negotiations for the new NFC Award. Why was the new NFC set up so late? The answer is: our politicians are callous and incompetent. For them, violation of constitutional provisions is not a significant matter. Day and night they give lectures on constitutionalism and rule of law and then keep on betraying their own words while the nation and courts are becoming immune to all this. This apathetic attitude of the civil society is merely encouraging rulers to flout the supreme law of the land with impunity.
While the former Finance Minister, Muhammad Ishaq Dar, now a fugitive, has been toeing the commands of IMF, the Punjab government under the infamous Khadim-i-Aala persuading him “to cut down the cash surplus target for Punjab” to create serious fiscal deficit for the centre. Nobody took note of it.
The extension of the 7th NFC Award, concluded on December 30, 2009 in Gwadar, was not according to the Constitution as there was a time limitation of five years under Article 160(1) which says: “within six months of the commencing day and thereafter at intervals not exceeding five years, the President shall constitute a National Finance Commission consisting of the Minister of Finance of the Federal Government, the Ministers of Finance of the Provincial Governments, and such other persons as may be appointed by the President after consultation with the Governors of the Provinces.”
The 7th NFC Award, termed as “landmark consensus”, was announced after a gap of 19 years. The 7th NFC Award was reached by accommodating major adjustments in vertical as well as horizontal distributions between the centre and the provinces and between provinces themselves. The shares were worked out on the basis of a formula that covered population, incidence of poverty, collection of revenues, and generation of revenues. Population was given a weight of 82 percent, poverty 10.3 percent, revenue collection 2.5 percent, revenue generation 2.5 percent and area 2.7 percent.
The Pakistan People Party (PPP) till today takes a great pride in achieving consensus over 7th NFC Award and 18th Amendment. Unfortunately, there are again indications of tussles between the centre and provinces over the distribution of resources under the new 9th NFC Award. The federal coalition government of PTI has reportedly assured IMF that it would strike a deal with the provinces “to balance revenue and expenditure responsibilities.” The provinces on the other hand are putting up fresh demands for increasing the divisible pool and compensation for hike in the weightage for lack of infrastructure and challenges of uprooting of people and destruction of property and businesses in the aftermath of war against terrorism, which they say is not provincial but national issue. Recently, all the finance ministers of provinces have warned that “any attempt by the federal government to minimise provincial resources or asking it to finance federal expenditures would be resisted.
After the 7th Award, both the federal government and provinces failed to observe strict financial discipline. Monstrous size of governmental departments is causing colossal wastage of resources. The governments are spending recklessly, a tendency that continues under civilian and military regimes, alike since the last many decades.
During the last 10 years, rising debt servicing, defence and security related expenditures have continuously reduced fiscal space for the federation. Cash-stripped government of the Pakistan Muslim League (Nawaz)—PML-N—was pursuing mega projects that could not be implemented without foreign investment and external debt. It also launched many ambitious schemes like youth loans that were abused.