Punjab landlords refuse to pay Islamic agri tax

Payment of obligatory tax could raise billions in revenue.

ISLAMABAD:

Since the Zakat and Usher Ordinance was introduced in 1980, landlords in Punjab in particular have refused to pay Usher, the Islamic tax on agricultural produce, The Express Tribune has learnt.

“The landowners maintain that they were willing to pay either agriculture tax or Usher, but are unwilling to pay both, although they do view Usher as a religious obligation,” Provincial Zakat department’s Deputy Secretary Shabbir Hussain told The Express Tribune.

The auditor general of Pakistan (AGP), in his 2009-10 report, took serious notice of the fact that since 1990, Usher was not being collected by provincial revenue departments throughout the country.

However, Tahir Maqsood, the joint secretary at the Ministry of Religious Affairs, said that Usher has been collected in all the provinces except for Punjab for several years now.

Hussain admitted that the collection of Usher was a crucial issue for the provincial government. He said that Punjab Chief Minister Shahbaz Sharif has recently constituted a committee to resolve the issue.

A senior official in the federal ministry of finance said that successive governments have been constantly asking provincial governments to collect Usher from all those farmers who are liable to pay since 1990, but provincial governments have taken no steps in this regard.

“In fact, those who have to execute the Usher ordinance are farmers and growers themselves,” the official told The Express Tribune, requesting anonymity. “The same people are creating obstacles in the implementation of Usher laws.”

Usher was introduced in the country from 1982-83 under the Zakat and Usher Ordinance 1980. The projected potential of Usher in 1980 was estimated at Rs2 to 3 billion. However, Usher collection receipts amounted to Rs39.46 million against the assessed amount of Rs122.70 million in the year 1991-2.

According to landlords, following the imposition of a regular agriculture income tax, Usher has become even more difficult to be rationalised as a tax on agricultural income. Despite the religious nature of its imposition, Usher is conceived to be a direct tax on a farmer’s income.

Following the implementation of the 18th Amendment, Zakat and Usher departments were transferred to provincial governments.

The administrator of Zakat in Lahore, Yousaf Butt, is of the view that new laws are required to collect Usher from farmers. He said an exercise on this issue was in progress in the Punjab government, adding that required legislation would be completed as early as possible.

Correction: An earlier version of this story had an incorrect headline stating "All but Punjab landlords refuse to pay Islamic agri tax" instead of "Punjab landlords refuse to pay Islamic agri tax". The correction has been made. 

Published in The Express Tribune, May 27^th, 2012.