'Punjab supports efforts to enhance tax-to-GDP ratio': report on 'Devolution in Pakistan' launched

The Punjab government would like to support the efforts of the federal government to increase its tax-to-GDP ratio by improving efficiency of tax administration and levying new direct and progressive taxes, targeting the rich and affluent classes.
Advisor to Punjab Chief Minister Zulfiqar Ali Khan Khosa expressed these views while addressing the launching ceremony of fourth Annual Report of Institute of Public Policy Beacon House University Lahore titled 'Devolution in Pakistan' here on Monday.
The advisor said: "Under the 18th constitutional amendment, the devolution of authority to provinces needs to be accompanied by additional resource transfer, to ensure sustainability of service delivery in devolved areas. It is also logical because the 7th NFC Award preceded the 18th amendment." Leading economists Shahid Javed Burki, Sartaj Aziz, Dr Ayesha Ghous and Dr Hafeez Pasha also spoke on the occasion and highlighted the salient features of the report.
Khosa said that based on the estimates provide by the federal government, the financial impact of devolution for Punjab alone, including the recurring cost of 18 ministries and development projects for next 5 years, is in the range of Rs 200 billion. He said that he agrees with the recommendation of the report that the provincial governments need to contribute to enhance the tax-to-GDP ratio of the country. He said that the primary responsibility to enhance tax-to -DP ratio rests with the federal government, as under the Constitution, it has been assigned the responsibility of collecting almost all major taxes.
On the role of Punjab government in approval of National Finance Commission Awards, he said that Punjab government agreed to change the formula for distributing the assets of divisible pool. "Our position always was that the share in population was the most suitable proxy of the fiscal need of a province. However, in the interest of the federation, the government of Punjab agreed to the demands of other provinces that other considerations such as Inverse Population Density, Poverty and Revenue should also be incorporated in the NFC formula. Consequently, there has been a significant transfer of resources from Punjab to other provinces, especially Balochistan and Khyber Pakhtunkhwa," he said.
He said that the Punjab cabinet has accorded approval to the draft of the Local Government (Amendment) Act, 2011 and it will be placed before the Punjab Assembly for approval. As soon as approval is accorded by the assembly, the date of local bodies' polls in Punjab would be announced.
Former deputy chairman Planning Commission of Pakistan Shahid Amjad Chaudhry said that social action programmes like Benazir Income Support Programme are required to be run by the provincial governments instead of federal government after the 18th Constitutional Amendment. He called for putting in place a uniform policy for power generation to overcome the power shortage. At present, there exists no clear policy for power sector that could help overcome energy shortage, he added.