Provincial Finance Commission

 Constitution of Provincial Finance Commission:

 Composition of the Finance Commission.

(1) The Finance Commission shall consist of eleven members, including:

(a) Minister for Finance Department, who shall be the Chairman of the Finance Commission;

(b) Minister for Local Government, Elections and Rural Development Department 1 [who shall be the Co-Chairman of the Finance Commission];

(c) two members of the Provincial Assembly of Khyber Pakhtunkhwa, one each nominated by the Chief Minister and Leader of Opposition in the Provincial Assembly;

(d) Secretary to Government, Finance Department;

(e) Secretary to Government, Planning and Development Department;

(f) Secretary to Government, Local Government, Elections and Rural Development Department;

(g) Secretary to Government, Law, Parliamentary Affairs and Human Rights Department; and

five Chairmen, Tehsil Local Government one each representing a Zone as detailed in Twelfth Schedule, elected by Chairmen, Tehsil Local Government in the respective Zone3

Provided that if elections are not held to the office of Chairman, Tehsil Local Government, then the vacancy in the Provincial Finance Commission shall be filled by the Chief Minister.

 (2) The Finance Department shall provide secretariat support to the Finance Commission and provide annual statement on transfer of funds in accordance with recommendations of the Finance Commission. (3) No proceedings or act of the Finance Commission shall be invalid merely on the ground of existence of a vacancy in its composition.

(4) Subject to this Act, the Finance Commission shall regulate its procedure and business.

Functions of the Finance Commission.

(1) The Finance Commission shall make recommendations to the Government on:

1. the amount of grant for local governments out of the proceeds of Provincial Consolidated Fund in a financial year in addition to the grant to local councils:

               Provided that in addition to the establishment charges budgeted for the devolved functions and transfers to local council, the development grant for local governments shall be so determined that it is not less than twenty percent (20%) of provincial share of Annual Development Programme in the respective year

Provided further that Government may allocate certain amount from the 10twenty per cent (20%) grant to a public interest fund to be administered by Government and to be used by public functionaries for the development of local governments;

Provided also that the twenty percent (20%) development grant shall be admissible only when the elected local governments are in place.

(b) formula for distribution of the grant, as Government may direct, among local governments in the Province;

(c)          the amount of special grants for local governments with modalities and conditions to access the facility; (d) grants in aid to local governments in need of assistance; and

(e)          matters relating to local government finance.

• While making recommendations, the Finance Commission shall take into account the principles of fiscal need, fiscal capacity, fiscal effort and fiscal performance of local governments.
• The Finance Commission shall also take into consideration poverty, population, lag in infrastructure and revenue base of local governments as factors while formulating its recommendations.
• The Finance Commission shall present to the Government annually a report on the analysis of fiscal transfers, the situation of own-source revenue in local governments and the reach and quality of their services and the Government shall cause the report to be laid before the Provincial Assembly.