Revenue Estimates From Land Taxation In Pakistan

Agricultural incomes are exempt from income tax under the present income tax law in Pakistan. Exemption to agricultural incomes from income tax was first provided in 1886. TIlls position remained unchanged till the time of independence in 1947. In the post independence period the exemption from income tax was retained. Farm incomes, however, were subjected to other forms of taxation, both direct and indirect [see e.g., QureShi (1987); Hamid, Nabi and Nasim (1990), (1991); Dorosh and Valdes (1990); Chaudhry (1991); and Nasim and Akhlaque (1992)]. Hoff (1991); and Skinner (1991a), (1991b); discuss some of the economic, political and administrative considerations for not extending the standard income tax to the agricultural sector. A uniform application of the income tax, in Pakistan, is also constrained by the nature of Pakistan's Constitutional structure. Under the constitution, taxation of agricultural incomes is the jurisdiction of the provincial governments, while taxation of incomes and profits from non-agricultural sources is the sole responsibility of the federal government. The provincial governments have not taken the initiative in imposing an agricultural income tax.