Rolling back the NFC, againIT is getting boring now. Every so often the idea is floated that the government should roll back the provincial allocations under the seventh National Finance Commission (NFC) Award in order to free up some fiscal space for itself. Sometimes, a few years go by between each episode when this suggestion is floated and a conversation flares up around the idea. In this case, only a few months later we are at it again.

The idea was floated in August 2023 when the caretaker government was preparing to enter office. It has been triggered once more following reports that the IMF has asked the government to ‘revisit’ the NFC Award to shore up its fiscal framework.

The arguments are the same. Those who advocate this rollback argue that the provincial allocations in the last NFC Award are unrealistic, frittering away slightly more than 58 per cent of the federal government’s tax take, while the provinces have done little to mobilise any of the revenue lines under their charge, such as taxing agriculture or real estate transactions. As such, they argue the Award creates a perverse incentive for the provinces to let the federal government do all the work while they get to enjoy the perks.

They go on to say that the provinces waste the resources they get under this arrangement. Former finance minister Miftah Ismail, for example, points out in an article that the provinces gave a 455pc increase in payroll expenses and a 480pc increase in development spending since the........

© Dawn