Federal Minister for Planning Ahsan Iqbal has expressed serious concerns over the current tax revenue distribution system, stating that 60% of the taxes collected by the federal government are transferred to provinces. He warned that if this continues, the federal development budget could be halved from Rs. 1 trillion to Rs. 500 billion within the next two to three years.
Speaking during an interview on Geo News’ Jirga, Iqbal highlighted the adverse impact of this financial model on key national projects. He pointed out that due to limited funds, mega initiatives like the Diamer-Bhasha Dam and Mohmand Dam are not receiving the necessary financial support. According to him, Rs. 1 trillion is required for Diamer-Bhasha and Rs. 300 billion for Mohmand Dam, but the current allocations fall short.
The minister also proposed restructuring welfare programs, suggesting that provinces should take responsibility for the Benazir Income Support Programme (BISP). Additionally, he stressed the need for Gilgit-Baltistan, Azad Kashmir, and the merged districts of Khyber Pakhtunkhwa to be included in the National Finance Commission (NFC) award to ensure fair resource distribution.
Iqbal’s remarks underscore the growing tension between federal and provincial financial responsibilities. With rising demands on the federal budget, the government faces tough choices in balancing development projects and fiscal sustainability, potentially slowing down critical infrastructure and social welfare initiatives.