What is NFC award? What is formula for sharing financial resources between federal and provincial governments?
Solution Idea:-
The NFC Award or National Finance Commission Award, is the distribution of financial resources among the provinces of Pakistan by the federal government on annual basis. Certain types of taxes collected in each province are pooled, then redistributed according to the NFC formula. What taxes to include in the distribution pool and the distribution formula is a subject of debate. Pakistan has had five NFC awards formulas. The Fifth NFC Award, adopted in 1997, was supposed to be valid for five years but failure to reach agreement on a sixth has meant that the fifth is still in operation.
Taxes are pooled and distributed: Certain types of taxes collected in each province are pooled, then redistributed according to the NFC formula. What taxes to include in the distribution pool and the distribution formula is a subject of debate.
Taxes included in the pool are (1) income taxes, (2) general sales tax, (3) wealth taxes, (4) capital gains taxes, and (5) custom duties.
Most Tax Receipts are collected from Punjab and Sindh. Almost all custom duties are collected at the Port of Karachi.
new NFC Award can not be announced because the four provinces have failed to develop consensus. Consensus has not been reached because Punjab province insists resource distribution on the basis of population alone whereas the other three province, namely North-West Frontier Province, Sindh and Balochistan demand giving importance to the revenue generation by each province, level of poverty in smaller provinces and other related factors as well, while distributing the national resources among provinces through National Finance Commission
Finance Minister Shaukat Tarin stated in August 2009, that population won't be the only parameter used in calculating the next NFC award.[2] For the distribution of the new award, factors such as inverse population density and poverty have also been kept in mind.
Taxes are pooled and distributed: Certain types of taxes collected in each province are pooled, then redistributed according to the NFC formula. What taxes to include in the distribution pool and the distribution formula is a subject of debate.
Taxes included in the pool are (1) income taxes, (2) general sales tax, (3) wealth taxes, (4) capital gains taxes, and (5) custom duties.
Most Tax Receipts are collected from Punjab and Sindh. Almost all custom duties are collected at the Port of Karachi.
new NFC Award can not be announced because the four provinces have failed to develop consensus. Consensus has not been reached because Punjab province insists resource distribution on the basis of population alone whereas the other three province, namely North-West Frontier Province, Sindh and Balochistan demand giving importance to the revenue generation by each province, level of poverty in smaller provinces and other related factors as well, while distributing the national resources among provinces through National Finance Commission
Finance Minister Shaukat Tarin stated in August 2009, that population won't be the only parameter used in calculating the next NFC award.[2] For the distribution of the new award, factors such as inverse population density and poverty have also been kept in mind.
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