In an examination of the 7th NFC Award (‘Fiscal realities: A case for NFC reform,’ March 20), which was printed in The News, I demonstrated that the taxes that province governments collect are insignificant in comparison to their spending; their payroll and development expenses are rising at an incredibly rapid rate; and even if we were to somehow double the amount of federal taxes collected, we would still be left with a massive deficit.Now, in their own columns, four scholars, whose qualifications and viewpoints I value, have expressed disagreement with me.
However, nobody has, dare I say it, explained to us how the federation can be saved from financial collapse and how, in the absence of a cut to the NFC Award, the entire nation’s budgetary position can be placed on solid basis. These pro-NFC essays have shown examples of specific areas, like pensions, where federal spending is rapidly growing. However, pensions are growing quickly in the provinces as well. If pension reforms are not implemented nationwide in Pakistan, as Khyber Pakhtunkhwa has attempted to do, pensions will surpass all other categories of spending in eight years, including defense.The provincial sales tax on services is increasing at a quicker rate than the federal sales tax on products, as has been mentioned.
However, the proliferation of mobile phones in Pakistan and the self-compliance of mobile providers are the reasons behind that specific rise. It is evident that no such advancement is shown by any other provincial tax. There have also been claims that the possibility for property or agricultural taxes is extremely restricted, such as the claim that half of Karachi is made up of katchi abadis. That might be the case, but what about the other 50%?
My general claim that the vast majority of provincial resources are provided by the federal government and that only 13% of provincial spending is funded by provincial taxes is still true. The facts that federal deficits have become unsustainable since the NFC and that provincial spending for political and other objectives has been relatively extravagant are equally valid.
