|
WB for tax by districts on
farm incomes
KARACHI-The World Bank (WB) is prompting Pakistan to transfer
income tax on agriculture from the provinces to the districts
to raise revenues. Although agricultural income-tax has
finally been introduced, say the WB officials but they are
dissatisfied that "its yields remain small."
A World Bank report has argued that "a higher rate of
agricultural income tax might be more acceptable if it were
levied by the districts rather than the provinces."
Agriculture is by far the largest sector of the national
economy, with a share of a quarter of the Gross Domestic
Product. Farm income tax has failed to contribute to the
annual nominal tax target of Rs2 billion set for the last
fiscal.
It is a major hurdle in widening the tax net and in ensuring
equity, as the almost entire income-tax collection of Rs125
billion is shared by trade, industry and the salaried classes,
sectors other than agriculture.
Whatever arrangements are ultimately introduced for
inter-governmental fiscal relations, the WB Pakistan Policy
Development Review (PDPR) stresses that there is likely to be
a need to allow local authorities to raise more revenues for
themselves. Agricultural income tax could be one area for
districts to increase their incomes.
While placing much focus at the policy level on poverty
reduction, the government has run into snags at the execution
level. In the first half of current fiscal, the spending on
social sector has declined by Rs16 billion. The National
Finance Commission has yet to give an award that would enable
the district governments to move towards financial autonomy.
Similarly, the Benami Law has become a hurdle in land reforms.
The WB states that the Benami Law which allows individuals to
register their assets in the name of someone else and thus
impedes efficient administration of everything from taxes to
land reform, has not been repealed.
In a number of areas, the WB notes that the government does
not have a coherent program to address important issues. One
of these concerns is devolution from the federal government to
the provinces. This was to happen in parallel to the active
program to devolve powers from the provinces to the districts.
The fiscal relations between the different levels of
government remains undefined so far, says the PDPR report.
Similarly, land markets are impeded by poor registration and
legal arrangements for transfer, thus creating obstacles both
for land reform and land consolidation that might combat land
fragmentation.
And the institutional reforms that were intended to devolve
responsibility for water resources to subsidiary principle
have moved at a snail's space, says the report.
courtesy Daily Dawn ,
24 April, 2002
|
Pakissan.com;
|
