By Amir Zia
The News
Monday, July 15, 2013
Targeting only the urban areas, which directly and indirectly hurts the lower and middle classes the most, is bound to further widen the rural-urban divide. The people in the cities already give their due share through both federal and provincial taxes and duties as well as share the burden of many of the unjustified subsidies that purely benefit landowners.
Let's call a spade a spade. The PPP's Sindh provincial budget for fiscal 2013-14 (July-June) punishes urban taxpayers and protects the interests of the small, but powerful, coterie of feudals and big landowners. By coming up with a controversial budget, the PPP has sharpened the rural-urban divide in one of the country's most ethnically diverse and polarised province where there remains a pressing need for balance and fairness in both the mobilisation and the distribution of resources.
But that is perhaps too much to ask from today's PPP, which has reduced itself to a Sindh rural-based party from the mighty force it once was across the country – inspiring and galvanising urban workers, the lower and middle classes, intellectuals and dreamers along with landless farmers and peasants. Today, the PPP is in a pit and seems to be digging itself deeper into the hole.
After being routed in most parts of the country in the May 2013 general elections, there were expectations that the PPP would go for a serious rethinking process and launch corrective measures in an attempt to bounce back and reclaim its lost turf, which includes the country's urban centres. One expected a desire to change and an urgency to improve that should have been reflected at least in the party's last bastion of power, Sindh, where it single-handedly runs the provincial government. But unfortunately it is the same old wheeling and dealing and the business of protecting the narrow interests of its lawmakers, who overwhelmingly come from the landed aristocracy.
Therefore, it should be of no surprise that the PPP-led Sindh government gave a provincial budget that let agricultural income remain untaxed and continued with heavy subsidies to this sector, which has been making a windfall – thanks to the massive increase in support price of key crops during the party's last stint in power. The provincial government also continued with the nominal tax on irrigated and un-irrigated land and orchards, which barely raise Rs200-300 million annually.
Water charges for agricultural land remained unchanged in the budget. In fact, they are the same since 1994, though they should be revised upward after every five years. The Sindh government gets around Rs400 million under this head, but spends around Rs9.0 billion per annum on the overall maintenance of the water supply system for agricultural land. It is indeed a large subsidy, and one that mainly benefits the big landlords.
Land revenue, which used to be charged since the days of the Great Mughals as land rent and continued though the British rule and well till the days of former premier Zulfikar Ali Bhutto, has long been abolished. The credit for this goes to the former military dictator General Ziaul Haq, who replaced it with the Islamic tax of Usher, which too has been abolished due to pressure by landowners. Since then, no parliament and no provincial assembly have managed to revive either land revenue or usher because of the dominance of landlords in the assemblies.
This is in stark contrast to Punjab, where recently the PML-N managed to bring agricultural income under the tax net. But Sindh is a different story. Schemes like providing tractors to farmers (read: influential people and landowners in the rural areas) on concessional rates also cost the exchequer billions of rupees at taxpayers' expense.
Arguments that all these subsidies and tax reliefs are meant to benefit landless, poor farmers and keep the agricultural economy afloat have now begun to stink. Our landowners are no paupers. Despite sharing, as they claim, their harvest with farmers, the landowners continue to keep large fancy houses in posh urban and rural areas, maintain lavish lifestyles and fleets of expensive vehicles. But ironically, the tillers of their land remain stuck in abject poverty and deprived of the most basic facilities of life. Even a flying visit to rural Sindh highlights the great divide between the rulers and the ruled there.
The PPP's lawmakers from rural areas are smart at protecting their narrow interests, but remain as callous as they punish the city dwellers, where the party's political stakes have receded due to such anti-urban polices. No wonder that out of the total expected Rs120 billion the provincial government plans to generate on its own in revenues – including the sales and services taxes – 67 percent comes from the urban areas. Even out of the remaining 33 percent, the contribution of the rural areas is not more than 50 percent.
In the current budget, instead of taking corrective measures to remove this lopsidedness in revenue generation and expanding the tax base in an equitable manner, the PPP provincial government focused only on the urban areas to increase revenue.
The property tax in urban areas has been increased to 25 percent (from 20 percent). A 16 percent duty slapped on a wide range of services – from accountants to architects and advertisements and advertising agents to airport ground service providers and aircraft operators. Beauty parlours, cable TV operators, caterers, clubs, marriage halls, courier service providers, health-care centres and gyms, hotels, restaurants and many other services have been brought under this net. The provincial government hopes to raise Rs42 billion under this head alone – all urban-centric.
The rate of cess has also been increased – this again hurts importers operating from Karachi. The Sindh government aims to raise 18.5 billion through the revised cess rates.
While the broadening of the tax base rightly remains the mantra in these difficult economic times, this expansion would have only made sense if the rural rich had also pitched their bit in the national cause. Targeting only the urban areas, which directly and indirectly hurts the lower and middle classes the most, is bound to further widen the rural-urban divide. The people in the cities already give their due share through both federal and provincial taxes and duties as well as share the burden of many of the unjustified subsidies that purely benefit landowners.
The expenditure on development in the provincial budget is again as unbalanced as revenue generation and aims to benefit select rural areas. Urban areas get no more than 25 percent out of the provincial budget. The current arrangement of resource mobilisation and spending by and large reflects the tilt in favour of the big landowners and agriculturists. This remains a recipe for trouble and is the biggest obstacle to rural-urban cohesion and harmony.
Agreed that the PPP's lawmakers mainly come from rural areas, but for a party that, despite being a shadow of its past, still claims to be a federal one, we would expect better judgement from its leadership. President Asif Ali Zardari and many individuals in his close coterie are as much Karachiites as any other city dweller, but it is ironic that they fail to strike a balance, or remain fair, in their party policies or rein in the hawks within its ranks. In the mid to long run, such myopic policies are likely to intensify polarisation in Sindh and give more room to those ethnic and narrow nationalist forces which want to stoke sentiments on issues that could be easily avoided.
The choice for the PPP is whether to continue playing the self-destructive rural card or act as a federal party. Does its leadership of today have the capacity to opt for the correct option?
The News
Monday, July 15, 2013
Targeting only the urban areas, which directly and indirectly hurts the lower and middle classes the most, is bound to further widen the rural-urban divide. The people in the cities already give their due share through both federal and provincial taxes and duties as well as share the burden of many of the unjustified subsidies that purely benefit landowners.
Let's call a spade a spade. The PPP's Sindh provincial budget for fiscal 2013-14 (July-June) punishes urban taxpayers and protects the interests of the small, but powerful, coterie of feudals and big landowners. By coming up with a controversial budget, the PPP has sharpened the rural-urban divide in one of the country's most ethnically diverse and polarised province where there remains a pressing need for balance and fairness in both the mobilisation and the distribution of resources.
But that is perhaps too much to ask from today's PPP, which has reduced itself to a Sindh rural-based party from the mighty force it once was across the country – inspiring and galvanising urban workers, the lower and middle classes, intellectuals and dreamers along with landless farmers and peasants. Today, the PPP is in a pit and seems to be digging itself deeper into the hole.
After being routed in most parts of the country in the May 2013 general elections, there were expectations that the PPP would go for a serious rethinking process and launch corrective measures in an attempt to bounce back and reclaim its lost turf, which includes the country's urban centres. One expected a desire to change and an urgency to improve that should have been reflected at least in the party's last bastion of power, Sindh, where it single-handedly runs the provincial government. But unfortunately it is the same old wheeling and dealing and the business of protecting the narrow interests of its lawmakers, who overwhelmingly come from the landed aristocracy.
Therefore, it should be of no surprise that the PPP-led Sindh government gave a provincial budget that let agricultural income remain untaxed and continued with heavy subsidies to this sector, which has been making a windfall – thanks to the massive increase in support price of key crops during the party's last stint in power. The provincial government also continued with the nominal tax on irrigated and un-irrigated land and orchards, which barely raise Rs200-300 million annually.
Water charges for agricultural land remained unchanged in the budget. In fact, they are the same since 1994, though they should be revised upward after every five years. The Sindh government gets around Rs400 million under this head, but spends around Rs9.0 billion per annum on the overall maintenance of the water supply system for agricultural land. It is indeed a large subsidy, and one that mainly benefits the big landlords.
Land revenue, which used to be charged since the days of the Great Mughals as land rent and continued though the British rule and well till the days of former premier Zulfikar Ali Bhutto, has long been abolished. The credit for this goes to the former military dictator General Ziaul Haq, who replaced it with the Islamic tax of Usher, which too has been abolished due to pressure by landowners. Since then, no parliament and no provincial assembly have managed to revive either land revenue or usher because of the dominance of landlords in the assemblies.
This is in stark contrast to Punjab, where recently the PML-N managed to bring agricultural income under the tax net. But Sindh is a different story. Schemes like providing tractors to farmers (read: influential people and landowners in the rural areas) on concessional rates also cost the exchequer billions of rupees at taxpayers' expense.
Arguments that all these subsidies and tax reliefs are meant to benefit landless, poor farmers and keep the agricultural economy afloat have now begun to stink. Our landowners are no paupers. Despite sharing, as they claim, their harvest with farmers, the landowners continue to keep large fancy houses in posh urban and rural areas, maintain lavish lifestyles and fleets of expensive vehicles. But ironically, the tillers of their land remain stuck in abject poverty and deprived of the most basic facilities of life. Even a flying visit to rural Sindh highlights the great divide between the rulers and the ruled there.
The PPP's lawmakers from rural areas are smart at protecting their narrow interests, but remain as callous as they punish the city dwellers, where the party's political stakes have receded due to such anti-urban polices. No wonder that out of the total expected Rs120 billion the provincial government plans to generate on its own in revenues – including the sales and services taxes – 67 percent comes from the urban areas. Even out of the remaining 33 percent, the contribution of the rural areas is not more than 50 percent.
In the current budget, instead of taking corrective measures to remove this lopsidedness in revenue generation and expanding the tax base in an equitable manner, the PPP provincial government focused only on the urban areas to increase revenue.
The property tax in urban areas has been increased to 25 percent (from 20 percent). A 16 percent duty slapped on a wide range of services – from accountants to architects and advertisements and advertising agents to airport ground service providers and aircraft operators. Beauty parlours, cable TV operators, caterers, clubs, marriage halls, courier service providers, health-care centres and gyms, hotels, restaurants and many other services have been brought under this net. The provincial government hopes to raise Rs42 billion under this head alone – all urban-centric.
The rate of cess has also been increased – this again hurts importers operating from Karachi. The Sindh government aims to raise 18.5 billion through the revised cess rates.
While the broadening of the tax base rightly remains the mantra in these difficult economic times, this expansion would have only made sense if the rural rich had also pitched their bit in the national cause. Targeting only the urban areas, which directly and indirectly hurts the lower and middle classes the most, is bound to further widen the rural-urban divide. The people in the cities already give their due share through both federal and provincial taxes and duties as well as share the burden of many of the unjustified subsidies that purely benefit landowners.
The expenditure on development in the provincial budget is again as unbalanced as revenue generation and aims to benefit select rural areas. Urban areas get no more than 25 percent out of the provincial budget. The current arrangement of resource mobilisation and spending by and large reflects the tilt in favour of the big landowners and agriculturists. This remains a recipe for trouble and is the biggest obstacle to rural-urban cohesion and harmony.
Agreed that the PPP's lawmakers mainly come from rural areas, but for a party that, despite being a shadow of its past, still claims to be a federal one, we would expect better judgement from its leadership. President Asif Ali Zardari and many individuals in his close coterie are as much Karachiites as any other city dweller, but it is ironic that they fail to strike a balance, or remain fair, in their party policies or rein in the hawks within its ranks. In the mid to long run, such myopic policies are likely to intensify polarisation in Sindh and give more room to those ethnic and narrow nationalist forces which want to stoke sentiments on issues that could be easily avoided.
The choice for the PPP is whether to continue playing the self-destructive rural card or act as a federal party. Does its leadership of today have the capacity to opt for the correct option?
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