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constitution assigns provincial governments to collect few taxes like agriculture income tax, motor vehicle tax, and royalty on natural resources. Thus, a bulk of revenues come to Federal government and provincial governments have a lesser amount of revenues. Consequently, they have to depend on the center for revenues and this creates vertical imbalance. That is the reason these two levels of government engage in conflict with each other very frequently.

 

National Finance Commission awards are expected to provide provincial autonomy by making fiscal transfers fair, thoughtful and reasonable. 91 to 93 percent of the taxes are collected by Federal government, and the provinces collect the remaining 6 to 7 percent taxes. While More than 60 percent share is taken by the center and the remaining is distributed among provinces. NFC awards are the key source of revenue for provinces to pay for public health, education, social services and other development needs. Thus, many functions which come under provincial governments’ jurisdiction are performed by the center because it has the capability to take up those functions. Such as, construction of roads and developing infrastructure is the responsibility of provincial government but is seen to be performed by Federal government. The dependency of provinces on the center for revenues has seized the provincial autonomy.

 

The federating units have always demanded a share of at least 50 percent (and ideally 60 percent) in the revenue pool but the center has always show unwillingness to do so. Provincial autonomy can be achieved by special grants to reward the fiscal effort of provinces. But there is an argument in this case, that provinces which have strong fiscal capacity

 

Horizontal Imbalance

 

Inflexibility in Revenue Distribution Formula

 

After studying the history of NFC awards, one is forced to think why population has been insisted as the only revenue sharing criteria? While this principle was not followed before 1971 for the revenue distribution between East Pakistan and West Pakistan. East Pakistan was more populous than West Pakistan, but it was discriminated by the government of West Pakistan and resources were not fairly distributed among the two units. Most resources were produced in East Pakistan, and consumed by West Pakistan. There were many factors contributed to the separation of East Pakistan, but one of the key reasons was “Distribution of Resources” which infuriated the people of East Pakistan against the government of West Pakistan, which finally resulted in the creation of a new country, Bangladesh.

 

Regional Imbalances

 

Though 1991 award and later on the 2010 award has expanded the divisible pool but the largest province i.e. Punjab has been given the most advantage because of its la本论文由英语论文网提供整理，提供论文代写，英语论文代写，代写论文，代写英语论文，代写留学生论文，代写英文论文，留学生论文代写相关核心关键词搜索。