Members of the Karachi Chamber of Commerce and Industry (KCCI) were taught a new lesson in commerce on Monday: demanding taxation on agriculture is unreasonable because ‘landlords pay taxes through wages to their farmers’.
Addressing KCCI members in a pre-budget meeting, Sindh Minister for Finance Syed Murad Ali Shah claimed landlords hand over 50% of crop output to farmers, which leaves them with very little taxable income. “We are taxed through higher wages; unlike the industrialists who pay just about 15% of total cost in salaries,” Shah maintained.
His claim drew loud protests from KCCI members. The provincial finance minister was duly informed that tax is payable as per a pre-determined rate on an individual’s income bracket; regardless of whether the landlord’s income is less or more than that of an industrialist.
Shifting gears with overall sentiment, Shah moderately appeased the meeting when he maintained that Sindh reserved the right of first use over natural resources found in the province.
“We want the Punjab government to follow the constitution, which says the province where the wellhead of a gas reservoir is located should be given priority in fulfilling its energy needs,” he said.
The minister refused to reveal anything specific about the upcoming budget; claiming he was under oath to not disclose details before the provincial assembly’s budget session. The minister also claimed that the solution to the energy crisis lay in utilising the Thar coal reserves.
Earlier, KCCI members suggested that provinces should collect taxes and pay the federal government its share; instead of the federal government collecting taxes from provinces directly and then disbursing their respective shares. The minister agreed to the proposal, saying the PPP had voted in favour of a similar resolution in the provincial assembly in 2003.
In response to complaints that the Karachi Water and Sewerage Board (KWSB) charged them up to Rs140 per thousand gallons of water – as opposed to Rs50 per thousand gallons that Punjab-based industrialists paid to their water authorities – Shah said KWSB had recovered only 30% of the amount it billed every year. “The Sindh government has to bail it out time and again,” he stated. When asked why KWSB had such a poor recovery record, he said it was “another matter”.
One businessman drew attention towards enhancing run-of-the-river electricity generation, saying that Sindh can easily produce up to 200 megawatts (MW) of power if the government starts developing sites already identified. The finance minister, however, disputed that a 200MW capacity was achievable; saying the potential from such electricity sources was far less than that.
The KCCI office-bearers appreciated efforts of the Sindh Revenue Board, which has so far collected up to Rs19 billion in sales tax on services, against the annual target of Rs25 billion. They also recommended that the body be designated the sole tax-collecting authority for all goods and services produced in the province.
They also proposed that in order to rationalise the power tariff, Sindh should determine it independently without interference from the National Power Regulatory Authority.
Published in The Express Tribune, May 22nd, 2012.
COMMENTS (21)
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seems his father sent a few crates of mangoes to all professors at Stanford and they liked mangoes from Pakistan so much that they gave him 2 Masters degrees instead of one. I feel ashamed of a few comments above from people who do not understand the dynamics of economic system and that they do not have respect for their talented people who sacrifice their careers and lavish life style abroad to help their people & country.
The minister is far more educated and learned. He is a double masters from Stanford and has rich experience in financial management etc & engineering. Agri tax would also raise prices of food and would have a domino effect on the economy and was probably assessed on PIU's rather then net income. How ever MATRICULATES running businesses & industries in Pakistan may not have the capacity to comprehend this.
@M. Ahmed: You are a joke ! your 'intellectual" level would not match up half the level of Murad Ali Shah you are just another losser believe me only a fool who has never met this man would comment like you did You forgot to include Citibank * Arab Banking Corp where he held high positions that should be included along with Stanford & NED among others
@academic_econ: you Idiot ! the man was a Quaid E Azam medalist from NED , Graduated from Stanford with a MS in engineering , Worked for Citibank both in London & ABC Bank in Kuwait and grew up in the Shadow of his father another Brillant Man Who a Senator, Minister & Chief Minister of Sindh Cut him some Slack he has a very difficult job !
@sick of this nonsense: India and Pak share same agricultural traditions. How come they are paying income tax and not us? Because India took bold step of land reforms long time ago and decreased the practice of " feudalisim" markedly. if I am a landowner and know that I will ahve to pay tax even after giving 50% to the laborers, I will probably like to share some work witht them on the fields rather than sitting in airconditioned drawing rooms and doing politics.
@GhostRider:
I agree about him destroying the good name of a great university.
Maybe I should not pay income tax because I also pay sales tax on everything I purchase as well as on utilities, my TV and internet, road toll tax, personal property tax, parking tax etc.
I could go on but I hope the point is made and the absurdity of the Sanford-educated Minister brought out more clearly.
God help Pakistan.
All of you who dared to remark against finance minister sindh, u will be called by privilege committee of sindh assembly........just like ch. Nisar..........and if u dont appear before the committee an exparte decision against u will be taken...........and u might end up with a jail term....... ;)
This is a good measure of the level of intellect of our awam dost.
Isnt it true that our agriculture sector makes over 20percent of our GDP yet its share in tax collection is just 1percent. On the other hand, manufacturing sector shares 60percent collection burden though its share is around 20percent of the GDP.
Unless we tax agriculture and services sector, tax collection will remain under 10percent of the GDP.
@Karachiite: Even after going to Stanford he cannot accept modern way of life then its a tragedy. Stanford and universities in its league stand for change not staus quo..he is brining a bad name to Stanford.
@Karachite: Feudals sons are normally very well educated, but they cause even more destruction. Do you agree that "Feudals pay more salaries to the laborers". Read the article, he doesn't even know how taxation works, what's the benefit of his degrees?
@Karachite
May be you also know that he is son of the late Abdullah Shah ex-CM Sindh of the Jeeya Sindh. Thats another qualification that is too important not to divulge.
The difference between success and faillure is the application of knowledge.
You may be a gold medalist and have your name on the honours roll but if you are not applying the acquired knowledge, you end up a dim wit.
@Karachite... In that case NED and Stanford should both revok his degrees...he has just lowered the academic standings of both these institutions...
@academic_econ: Just for your information sir, Murad Ali Shah was a Gold Medelist at NED and completed his MBA from Stanford University (in case you didn't know NED is one of Pakistan's top institutions and Stanford is one of the highest ranked universities in the world at the same level as Harvard and Yale)
well he is very right .. 50% of output goes to farmer .. but a farmer usually get only few acres of land .. so if a landlord have 100 acres of land there will be probably 20 farmers working on it .. so govt can atleast tax landlord on that 50% chunk of the output of 100 acres .. but it shouldnt be pre profit tax as it will hurt small farmer who get 50% of probably 3-4 acres of land ..
Mr. minister.....for your kind information and poor knowledge, the tax is applied on the net income before tax not on wages. Who made u the finance minister of this province. No wonder......the sindh is going in the direction we all see very well.
Actually he is quite literate.............but yes he is uneducated......in the sense that he cannot take educated decisons. It has been the problem with our ruling elite, for generations. They get the best education in the world because they have resources, not necessary due to their talents...............but when it comes to applying the education or the social norms they experienced in the west they fail miserably. They become the protector and saviour of their social class and its vested interest...........depriving their 'subjects' from even the basic rights.
@academic_econ: If you dont know the dynamics of agriculture kindly dont pass judgement. It is a rule of thumb that 50% of crop output goes to the farmers. It may be a shocker to you but most agriculturists I know do give those 50% to their farmers which leaves their taxable income not as high as one presumes. However I too am in favor of some sort of tax on agriculturists but it has to be at a minimum. To tax the big land lords the small landlords should not suffer.
after reading this article i cant decide whether to laugh at the innocence of the feudals or cry at this brazen economic terrorism of the feudals. God help us!!!!
How do these uneducated and worthless people given such important and vital ministries?