Charter of the Economy The 7 th NFC Award introduced four criteria, with the dominant criteria being population share. Two criteria namely poverty incidence and inverse of population density, were added to promote fiscal equalization, leading to a higher share than population to the two relatively backward Provinces, Balochistan and Khyber-Pakhtunkhwa. One criterion was included to reflect the contribution by a Province to Federal tax revenues. Table 7.2: Criteria Used in Horizontal Distribution of Divisible Pool Taxes Divisible Pool Taxes 1 st NFC 1974 4 th NFC 1991 5 th NFC 1997 PO 2006* Population 100.0 100.0 100.0 100.0 Poverty/ Backwardness--- ­Revenue Collection/ Generation --- ­Inverse Population density--- ­*Other than 1/6 th of sales tax on goods collected and distributed in lieu of Octroi/ Zila Tax. Source : NFC Secretariat[2010] (%) 7 th NFC 2010 82.0 10.3 5.0 2.7 Other features of the 7 th NFC Award include the following: i) Provinces have been given the choice to levy and collect GST on services themselves or ask FBR to collect it on their behalf. The expectation is that there will be no Federal excise duties on services. ii) The magnitude of straight transfers has been raised. These transfers include the gas development surcharge(GDS), excise duty on gas and royalty on gas and oil. The distribution will be on the share in collection. iii) Special grants have been given, first, to Sindh in lieu of the octroi/zila tax, second arrears to Khyber-Pakhtunkhwa of hydro-electricity profits and, third, arrears of the GD to Balochistan. iv) The costs of collection of divisible pool taxes have been reduced from 5 percent to 1 percent. v) A special transfer of 1 percent of the divisible pool(net) to Khyber-Pakhtunkhwa to provide resources for the War on Terror. vi) In recognition of the special needs of Balochistan, Rs 83 billion was to be given to the Province in the first year, 2010-11, of the Award. Any shortfall in future was to be met by the Federal Government. 64