ISLAMABAD     -       The inability of the Federal Board of Revenue (FBR) to meet its tax collection target has once again hit the provincial governments in terms of receiving funds from the federal government under the National Finance Commission (NFC) Award.

The Centre has transferred less than Rs201.2 billion to each provincial government under the NFC Award during the first quarter (July to September) of the current fiscal year (FY).

All four provinces have received total Rs612.5 billion from the federal government as against their projected share of Rs813.63 billion due to the massive tax collection shortfall of Rs107 billion during July to September period of the financial year, 2019-20.

The FBR, which was eyeing the target of Rs1071 billion for the first quarter of this year, managed to collect Rs964 billion.

The data shows that the federal government has slashed the provinces’ share more than the shortfall suffered by the FBR in the first quarter of the current FY. The federal government had told the provincial governments that the amount to be transferred to them depended on the FBR’s tax collection.Provinces may face the same situation in the entire current fiscal year as the FBR is struggling to achieve its target. The shortfall is increasing with each passing day.

The FBR has provisionally collected Rs1,610 billion during the five months (July-November) of the current FY against the target of Rs1,828.4 billion, reflecting the shortfall of Rs218.4 billion.

The federal government would have to transfer Rs3254.6 billion to the four provincial governments under the NFC Award during the present fiscal year as against Rs2462.7 billion handed to them last year.

This is notwithstanding the fact that the Centre had increased the provinces’ share in the Award by 32 percent for this fiscal year.

The provincial governments get shares from the federal government under the NFC Award as per this formula: Punjab gets 51.74 percent, Sindh 24.55 percent, Khyber Pakhtunkhwa (KP) 14.62 percent and Balochistan 9.09 percent.

The data collected by the Ministry of Finance shows that the federal government has transferred Rs293.5 billion to Punjab in the first quarter of this FY. The amount is 18.2 percent of the province’s annual share in the Award.

The federal government has projected to transfer Rs1611.4 billion to Punjab in the ongoing fiscal year.

Meanwhile, Sindh has received only 17.8 percent of its share from the federal government as against the projected 25 percent share. The federal government has transferred Rs145.02 billion to Sindh during July-September period of the ongoing financial year. In all, Sindh will receive Rs814.9 billion from the Centre in the entire FY. According to the documents, KP has received Rs97.03 billion from the federal government, which is 18 percent of its annual share. The province will receive Rs533.3 billion as against Rs404 billion in the last year.

 

KP would get one percent under the war on terror.

However, Balochistan has received more than its projected share. The province has received Rs85.9 billion from the federal government under the NFC Award in the first quarter of the current fiscal year, which is 29 percent of its annual share of Rs295 billion.

It is worth mentioning here that the five-year constitutional term of the financial arrangement, NFC, had expired on June 30, 2015. However, the Pakistan Muslim League-Nawaz government had paid no heed to the demand of the provinces for formulating a fresh revenue sharing formula.

The incumbent government had reconstituted the NFC, but it held only two meetings under the former finance minister Asad Umar. However, the government did not reconstitute the NFC after the removal of Umar from the post.