The federal government has sent a letter to provincial governments, trying to convince them to set aside seven per cent of their tax money for the country’s internal security, development of Gilgit-Baltistan, Azad Kashmir and tribal areas of Khyber Pakhtunkhwa.

In the current 7th NFC award, 42.5 per cent of the divisible pool of taxes is given to the central government. From the remaining 57.5 per cent, Punjab gets 51.74 per cent, Sindh 24.55 per cent, K-P 14.62 per cent and Balochistan 9.09 per cent. If the calculation is made on the basis of revenue, the share of Punjab drops down to 23.04 per cent whereas Sindh’s share goes up to at 69.02 per cent.

Tanvir Ashraf Kaira, former Punjab finance minister from 2008-2011 and leader of Pakistan People’s Party (PPP) believes reduction in the share of provinces would be a violation of the constitution.

Before the implementation of the 18th Amendment "the centre took away 88.5 per cent of royalty on natural resources. Now, since education and health departments are the responsibility of the province, NFC award has become more crucial for the provinces," Kaira adds. "PPP will not allow such a thing to happen because this policy will not only create financial problems for the provinces but also hurt inter-provincial harmony."

Pakistan Muslim League-Q that was among the 14 parties in the National Assembly and Senate that voted for the 18th Amendment, is now sharing the treasury benches in both Islamabad and Punjab.

While talking to TNS, spokesperson Pakistan Muslim League-Q, Senator Kamil Ali Agha, expresses concerns on the question of expected seven per cent cut from the provincial share. "The government has not discussed such a policy with us. Certainly, PML-Q will come up with a transparent policy on the reduction of provincial share in the NFC. This must be discussed at the right forum because the government is not in a position to bring an amendment to reduce provincial share which was given under the 18th Amendment."

However, Agha is a strong supporter of reducing 3 per cent share of the provinces from the NFC award for erstwhile FATA. "The cabinet has taken the right decision at the right time. We believe opposition parties must support such an important effort to uplift the lives of the most under-developed area of the country. All stakeholders have to demonstrate flexibility and mutual accommodation for arriving at a decision to strengthen fiscal federalism."

The PML-N government did not pay attention to the concerns of the provincial governments for not making fresh revenue-sharing formula when the five-year constitutional term of NFC expired in 2015. Because of not presenting the 8th NFC award, the PML-N government decided to extend the 7th NFC award for another year, 2017-18.

Also read: The award and the G-B problem

Despite the fact that in the 2017-18 budget, PML-N government was unsuccessful in constituting a new revenue-sharing formula between the centre and provinces on the basis of 7^th NFC award, former Finance Minister Punjab, Dr. Aysha Ghous Pasha, criticises the PTI government for not forming the constitutional body. "PTI government has again shown immaturity by announcing to cut provincial share from the NFC award. The government wants to introduce the devolution plan similar to former dictators Ayub Khan and Pervez Musharraf which, in-fact, weakens constitutional institutions".

Dr. Pasha believes that reversal of the 18th Amendment is impossible and efforts to corner provinces on this issue would be considered a policy to compromise national sovereignty. "The government should have ensured full representation from all provinces before taking the decision of giving 3 per cent share to KP for FATA. To talk about changing the 18th Amendment is actually a step to weaken the state institutions. That is unlike the claims that PTI has always asserted."

Apart from the technical and legal hindrance, to develop consensus on the reduction in provinces’ share among the coalition partners will also be very challenging for PTI. As for Punjab, the creation of a new South Punjab province and distribution of funds as per the new census remain valid concerns while finalising the 9^th NFC award.