KARACHI, Dec 4: By and large, the recovery of all the agricultural related taxes in Sindh (and these include the agricultural income tax and land tax) are on decline in the last four years , but the income generated by the agriculture has increased from Rs202 billion in 99-00 to more than Rs226 billion 03-04.

An increase of more than Rs24 billion from agricultural income is despite the reports of acute water scarcity and visible signs of increasing poverty in the rural areas during last four years. Obviously, the increase in agricultural income is shared by a very limited circle of elite landed gentry who do not pay tax.

The total tax collection from agricultural income in 00-01 was Rs444.77 million which remains the highest ever recovery in last ten years since 1994 when it was introduced for the first time. The collection came down to Rs397 million in 01-02, to Rs251 million in 02-03 and to Rs201 million in 03-94.

There are six other small and big levies on agriculture which have also shown a marked decline in collection. The Land Tax recovery was Rs11.73 million in 00-01 and now has come down to Rs7.36 million in 03-04. Water rate recovery was Rs9.77 million four years back is now reduced to Rs1.87 million. The collection of local cess, drainage cess, on farm water management and mutation fee is just insignificant.

Compare this rural situation with those in urban areas of Sindh where the number of income tax payers has increased from 575,000 in 99-00 to 700,000 in 03-04. They paid about Rs55 billion tax on their incomes in 99-00 which is said to have gone up beyond Rs125 billion in 03-04.

The small scale industry anywhere in the world is the main generator of jobs. In Sindh, the value of small scale industry products came down from Rs14.43 billion to Rs13.48 billion. A fall in industrial production in small scale industry must have claimed a heavy toll of jobs and a big cut in the take home wages of the employees.

Large scale industrial production grew from Rs111.36 billion in 99-00 to Rs135.59 billion in 03-04 while construction increased from Rs32.44 billion to Rs36.26 billion last year.

The share of small scale industry in fact came down to 8.3 per cent in the Sindh economy while that of large scale economy from 34.8 per cent to 30.4 per cent. The share of agriculture increased from 26.5 per cent to 26.9 per cent in the provincial economy during last four years.

The rural elite gets 33 per cent subsidy on electricity bill of their tube wells, obtained more than Rs70 billion loans from the banks in last four years, hardly pays 40 per cent of the cost on maintenance of canals and management of irrigation water.

Growing budgetary imbalance, Islamabad's reluctance to offer grants and subventions and the mounting pressures from the donor agencies like the World Bank has forced the Sindh coalition to take some steps for improvement in the tax collection system.

The provincial revenue minister Imtiaz Sheikh was not available for providing answers but the officials in the Board of Revenue unveiled a programme for improvement in the tax collection system. Revamping is being done at the lowest level of dehs where supervisor tapedar will be appointed on three or four tapedars. Schedules are being finalized to check and counter checks the assessment of all agricultural related taxes.

Nadir Akmal Leghari, the provincial irrigation minister disclosed that telemetry system would be introduced to find out the flow of water in the canals and its use by the farmers.

But the main problem is that there is hardly any record available of the land holdings. Quite a substantial agricultural land remains 'benami' under the physical possession of the powerful feudals.

The late Zulkfikar Ali Bhutto announced the third land reforms in January 1977 in which the holdings were reduced to a maximum limit of 100 acres of un-irrigated land and 50 acres of irrigated lands. He introduced for the first time the tax on agricultural income.

In his very initial days, after takeover of the government in July 1977 late General Ziaul Haq repealed all these reforms without making any formal announcement and won his side all the feudals in the Pakistan People's Party. It took 16 years when Benazir Bhutto introduced tax on agricultural income in 1994 during her second term. She has pledged before a gathering of businessmen in the Federation of Pakistan Chambers of Commerce and Industry to tax the agriculturists after she was dismissed in 1990. But feudals have powerful patrons and they continue to the best of democracy, military rule and a mix of the two till this day.