December 06, 2006	Wednesday	Ziqa'ad 14, 1427

KARACHI, Dec 5: Pakistan’s super rich agriculturists paid only Rs1.6 billion tax on their income during last fiscal year when they showed a total value addition of more than Rs1 trillion, says the annual report of the State Bank of Pakistan for 2005-06.

The total share of agriculture is about 23 per cent of Rs7.3 trillion economy but tax recovery is less than two per cent as against more than 40 per cent being paid by the industry that is only 18 per cent of the GDP The government now expects agricultural tax recovery of about Rs2.5 billion in the current fiscal year.

The highest tax amount of Rs1.31 billion was recovered from Punjab in 2005-06 followed by Rs300 million from Sindh and only Rs50 million from NWFP. There is no tax recovery from Balochistan.

Economists doubt the figures of tax recovery from Sindh and NWFP as the Board of Revenue of both the provinces are being administered in most primitive and outdated manners.

The income assessment on crops and tax amount is fixed by low level government servants - patwaris and tehsildars - who are in close nexus with rich landlords for generations. “Only small and poor pay taxes on their crop incomes,” remarked a big landlord and member of Sindh Assembly in one of the pre-budget seminars about a year ago.

There is hardly any land-holding record in Sindh as officials say that the entire record was shifted to Lahore after one unit in 1954 and it was not returned.

Powerful landlords occupy state land with impunity and according to a retired bureaucrat the floods and delayed rains this monsoon has left banks on the either sides of River Indus rich with alluvial soil on which wheat and some other crop have been sown. The crop is grown on about 1.5 million acres while forests occupy 600,000 acres. Powerful landlords have their comfort houses known as “ketties” in these forests and near the land under their occupation. These also serve part time sanctuaries for the dacoits.

In Sindh, the agricultural income tax law has been amended at least four times since 1993 to serve the interests of the big landlords who dominate the politics of the province. But the tax recovery has never been more than a few hundred millions. In most of the years the agricultural income tax recovery has been only a few million rupees.

The agricultural income tax was introduced for the first time in Pakistan by late Zulfikar Ali Bhutto in January 1977. He announced the second phase of his land reforms, levy of tax on agricultural income and abolition of centuries old land tax. The agricultural income tax was made part of 1977-78 budget.

After taking over the government on July 5, 1977, the limitary dictator repealed the agricultural income tax law on the plea that it was a provincial subject. The land reforms were never implemented but were finally annulled in Shariat Court verdict. By doing so, Ziaul Haq won over the mighty landlords of Sindh, Balochistan and Punjab’s Seraiki belt on his side.

After Benazir was dismissed by late Ghulam Ishaq Khan in 1990, she promised to enforce tax on agriculturists in a meeting of Federation of Pakistan Chambers of Commerce and Industry when she came back into power again. She did implement her promise and enforced tax on agriculturists in 1994, but land reforms have been opposed by the rich and powerful landlords who argue that how can a maximum land ceiling ownership is justified when urban based businessmen are free to own unlimited amount of assets and property.