Feudalism in Pakistan

[fatman17]

August 1, 2009,

Feudalism in Pakistan

By Nicholas Kristof

I sometimes wonder if what Pakistan doesn’t really need is a good dose of land reform to break up feudal power. The extraordinary inequities in Pakistan seem not only unjust but also an impediment to both economic growth and national consensus.

For those who haven’t been to Pakistan, you should know that in remote areas you periodically run into vast estates — comparable to medieval Europe — in which the landowner runs the town, perhaps operates a private prison in which enemies are placed, and sometimes pretty much enslaves local people through debt bondage, generation after generation. This feudal elite has migrated into politics, where it exerts huge influence. And just as the heartlessness of feudal and capitalist barons in the 19th century created space for Communists, so in Pakistan this same lack of compassion for ordinary people seems to create space for Islamic extremists. There are other answers, of course, such as education, civil society, and the lawyers’ movement. But I wonder if land reform wouldn’t be a big help.

Dwight Perkins, the great Harvard economist of development, argued that a crucial factor in the rise of East Asia was the land reform and division in countries like Japan and South Korea after World War II, creating a more equal society. (In Japan, this was done under U.S. auspices: we were much more socialist outside our country than in it.) Likewise, India had its own land reform in 1953, but Pakistan was left out.

I’ve often focused on education as the greatest need for Pakistan, but even there the feudal structure is replicated. There are first-rate schools in English for the elite, second-rate schools for the strivers, and execrable schools for the masses. At the bad schools, teachers don’t even bother to show up. This highly stratified system tends to perpetuate an ossified economic and social structure, and creates less room for the country to innovate and build or use human capital.

But I’m a novice here. Those of you who know Pakistan much better than I — what do you think? Is the feudal land structure a major part of the problem? And if so, is it so entrenched that it’s not even worth dreaming of land reform? Is it more feasible to chip away at the feudal structure by broadening education? I’m all ears. Let me know what you think.

 

[araz]

When you say land reforms what do you propose to do. If you limit the amount of land one party can hold it will be divided in the family members and we will be back to square one. the other thing to think about isthat the Armys way of keeping its generals happy is to give them land. Is this not indirectly protecting the interests of the land owners , the army being the most organized institute in the country.
I for one think of land holding as another way of owning industry. SO why not institute a tax on the earnings of the land lord. A week before harvest one can take satellite photographs of the area. i am sure one can calculate how much the crop yield from the yr might be( is it possible ??). You could institute a tax nbased on the yield of a region. If the land lord has not produced enough tough luick!! he will just have to try harder next time. In my view it will coerce our landed gentry to take more interest in their holdings.
waSalam
Araz

 

[fatman17]

I for one think of land holding as another way of owning industry. SO why not institute a tax on the earnings of the land lord.


a valuable suggestion my friend, but who will institute this tax?, the same feudals who are sitting in parliament! - i doubt it! - if it can be done in India or elsewhere, why not here?

 

[Elmo]

Using satellite imagery for taxation purposes... now that's way too hi-tech for us in the Third World

As noted here, the division of land has not been successful because the effects have not trickled down to the smaller landowners or the landless peasants. The land was divided up between family members way before its implementation and could not be taken away by the state.

So what to do, it sounds fat fetched, but probably take away the land from the "landed gentry" and distribute it to the peasants. The feudals cannot be coerced into giving up anything in this state

Anyone knows the status of the land reforms these days?

 

[fatman17]

Using satellite imagery for taxation purposes... now that's way too hi-tech for us in the Third World

As noted here, the division of land has not been successful because the effects have not trickled down to the smaller landowners or the landless peasants. The land was divided up between family members way before its implementation and could not be taken away by the state.

So what to do, it sounds fat fetched, but probably take away the land from the "landed gentry" and distribute it to the peasants. The feudals cannot be coerced into giving up anything in this state

Anyone knows the status of the land reforms these days?[/QUOTE]

how about nil, nada, zilch, zero!

 

[Elmo]

how about nil, nada, zilch, zero!

Yeah, that will do — always does on PDF

 

[fatman17]

Yeah, that will do — always does on PDF

yeah, take it or leave it !

 

[Ratus Ratus]

I for one think of land holding as another way of owning industry. SO why not institute a tax on the earnings of the land lord.


Seriously tax the landlord and who will pay that tax? Yep the poor guy at the bottom of the food chain and he is the one who can not afford to pay. he is already in debt to the landlord.

the other thing to think about isthat the Armys way of keeping its generals happy is to give them land. Is this not indirectly protecting the interests of the land owners , the army being the most organized institute in the country.
Is this not "Army" land in the first place?


So how much relates to 'Army Inc' as well?

 

[fatman17]

I for one think of land holding as another way of owning industry. SO why not institute a tax on the earnings of the land lord.


Seriously tax the landlord and who will pay that tax? Yep the poor guy at the bottom of the food chain and he is the one who can not afford to pay. he is already in debt to the landlord.

the other thing to think about isthat the Armys way of keeping its generals happy is to give them land. Is this not indirectly protecting the interests of the land owners , the army being the most organized institute in the country.
Is this not "Army" land in the first place?


So how much relates to 'Army Inc' as well?

each general rank gets a piece of govt. owned land at retirement - musharraf got 2 units (its 40 acres) at the time of retirement - remember a lot of officers also come from landed gentry, so they already have vast tracts of land belonging to the families. a lot of officers who make general staff wed their siblings into feudal families so this network of protecting the lands is sustained!

 

[TaimiKhan]

Tax-free farm income

By Ashfak Bokhari


THE decades-old issue of levying tax on agricultural income came again under discussion last month. This time it was during a meeting of the Senate’s standing committee on finance held on January 29 to explore new sources of raising tax revenue.

And as one could expect, the committee failed to come to any positive conclusion because there was outright opposition to taxing income of the landowners.

Some members found tax exemption given to agriculturists ‘unjustified’ and asked for ending it but others maintained that to do so required a constitutional amendment.

Chairman of the committee was too forthright in his remarks. He said that since 70 per cent of the legislators, being landowners, would oppose any bill in parliament designed to bring (their) income from the agriculture sector into the tax net, there was no possibility of such a tax being imposed. The committee, instead, decided to tighten tax screws on professionals like doctors, lawyers, chartered accountants, etc.

Currently the share of agriculture in GDP stands at 20.9 per cent but its share in taxes is only 1.2 per cent while, in stark contrast, the share of the manufacturing sector in GDP is 18.9 per cent (slightly less) but its contribution to taxes is hefty 50.8 per cent. The share of agriculture in taxes is not from the income raised from crops produce but from the land tax which is levied by provincial governments on the area under cultivation. And even this payment of tax is on decline.

It is amazing that Sindh’s landowners who constitute the ruling elite of the province have so far paid only Rs7 million as farm (land) tax till November, 2008 in the current fiscal. The target the provincial government has set for the whole 2008-09 fiscal year is Rs336 million. In 200-01, the tax collection from the agriculture sector in Sindh was Rs444.77 million but it fell to R397 million in 2001-02 and then to Rs251 million in 2002-03. The continuing decline in tax payment does not come from any reduction in the size of cultivable land. It only means the landowners are avoiding payment of actual tax amounts.

Now that the Public Accounts Committee of the National Assembly has begun playing an active role in doing away with discrepancies, and removing distortions, in important segments of national life and state institutions, it is high time that it took up the issue of exemption enjoyed by the landed gentry from paying taxes on income and to meet the ends of equity and justice by recommending an amendment in the constitution to undo this anomaly. It is all the more repulsive when one finds a poorly paid clerk being compelled by the state to pay income tax by deducting the amount at source.

On the eve of negotiations with the IMF for a loan package, Shaukat Tarin had hinted at bringing agricultural income under tax net but the idea was dropped when there was a hostile backlash from the feudal lobby which dominates legislatures. In both, National and in Punjab Assembly, stiff resistance to such a measure was in evidence. The IMF had itself opted to refrain from disturbing the status quo because the economy was already in dire conditions.

The Federal Board of Revenue estimates that the actual potential of tax collection from this sector is about Rs200 billion and plans to raise at least Rs70 billion under a new framework from next fiscal year. Although it is a provincial subject, it would provide technical assistance to land revenue departments of the provinces to accelerate tax collection.

The new framework has been prepared by the fiscal research and statistics wing of the FBR under which the tax is to be collected from the sale of agricultural produce. Will it be the income tax, wealth tax or sales tax is not clear. Shaukat Tarin has been informed about this scheme and he has agreed to discuss the matter with the prime minister for its approval. Currently, provinces collect tax on land but not on the income from the crops. Increase in collection can be made only by better enforcement of law and better collection procedures.

An IMF study carried out by Mahmood H. Khan and Mohsin S. Khan on Pakistan’s farm tax issue suggests a way that the government could implement a system of agricultural taxation within the existing constitutional framework. In the short term, the provincial governments should revise the number of PIUs (produce index units) per hectare, since they are completely out of date in terms of reflecting market values of productive capacity of farm lands. (The PIU is a measure of the productive capacity of agricultural land. It is used to establish the equivalence of parcels of land in different parts of the country.) An adjustment of PIUs alone would yield significant revenues in the short-run. In the long run, provincial governments could move to taxing net agricultural income, using the productive capacity of land or presumed income as the base.

However, the study says, there are two important issues that need to be properly addressed. The first relates to handling the power of the landlord lobby. Even if the federal government was convinced of the need to tax agricultural producers, it cannot go ahead without winning consent of the provinces to enact such a tax. It seems that not all the provinces will agree to have the tax. For the purpose, the centre can use, if needed, certain arm-twisting methods. For instance, since the provinces depend on the centre for tax revenue transfers, the latter can link such transfers to the former’s capacity to generate tax revenues from agriculture. This may neutralise landowners’ political pressures.

Second issue relates to the provinces’ capacity with regard to revenue administration. The last major review of the administration was undertaken by the military government in 1978. According to recent studies, much work needs to be done to update the land title records and digitised soil maps are required to establish land classification and values by soil, water and crop conditions. Without completing all this work, one cannot estimate land values and ownership, and therefore presumed incomes for tax purposes. Therefore, a period of three to five years is needed to implement a full-fledged agricultural income tax system after a formal decision is made in this regard.

There is now a consensus in the country, and even landowners in general concede, that it is time that agricultural producers started paying their fair share of taxes as do others. The vast amount of revenue to be raised from their income tax and wealth tax would greatly strengthen the country’s fiscal position. No doubt, designing and implementing farm income tax may be a difficult proposition but not an impossible one to resolve. To be on the right side of history, we can no more delay it.

 

[fatman17]

And as one could expect, the committee failed to come to any positive conclusion because there was outright opposition to taxing income of the landowners.

what else is new in the "land of the free and corrupt"!

 

[TaimiKhan]

If our politicians are not capable enough then i don't understand why all & every time the blame comes onto the military or generals ???

these politicians don't pay taxes their whole life, while an army officer or a general in his 30 to 35 years of service pays non stop taxes, plus all the business concerns being run for the welfare of retired armed forces personnel give the corporate tax they own to the govt properly.

In other words, army itself generates some part of its own budget by giving back taxes to the govt.

So why people have to go after military when our politicians and industrialists are much much worse corrupt then the military ??

Has ayesha siddiqui kind of people written books about the money which the industrialists & politicians & land lords eat by damaging pakistan's economy ?? how much tax these three segments own and in reality what they give ??
During my MBA we were shown a survey by an FBR guy, the study was done on the avg income tax collection done from the Lahore's some top markets. Liberty market was one of them, and the per year avg of income tax being given by the shopkeepers & business owners from just Liberty market was 5000 to 6000 rupees per year. So just imagine, the people who own shops in liberty market just give at the max 6000 rupees income tax per year.

Everyone feels a superman when they go after the military but no one looks to the corruption & tax evasion done by the elite of our country, as well as the average business owners.

---------- Post added at 12:21 PM ---------- Previous post was at 12:21 PM ----------

If our politicians are not capable enough then i don't understand why all & every time the blame comes onto the military or generals ???

these politicians don't pay taxes their whole life, while an army officer or a general in his 30 to 35 years of service pays non stop taxes, plus all the business concerns being run for the welfare of retired armed forces personnel give the corporate tax they own to the govt properly.

In other words, army itself generates some part of its own budget by giving back taxes to the govt.

So why people have to go after military when our politicians and industrialists are much much worse corrupt then the military ??

Has ayesha siddiqui kind of people written books about the money which the industrialists & politicians & land lords eat by damaging pakistan's economy ?? how much tax these three segments own and in reality what they give ??
During my MBA we were shown a survey by an FBR guy, the study was done on the avg income tax collection done from the Lahore's some top markets. Liberty market was one of them, and the per year avg of income tax being given by the shopkeepers & business owners from just Liberty market was 5000 to 6000 rupees per year. So just imagine, the people who own shops in liberty market just give at the max 6000 rupees income tax per year.

Everyone feels a superman when they go after the military but no one looks to the corruption & tax evasion done by the elite of our country, as well as the average business owners.