The Theory and Practice of Agricultural Income Tax in Pakistan and a Viable Solution

Pakistan has a history of taxing agriculture through the land revenue system. Being income and price inelastic, the replacement of the system with agricultural income tax is considered inevitable for meeting the financial needs of a growing national economy. In fact, under pressures from World Bank and International Monetary Fund (IMF), Pakistan introduced various variants of agricultural income tax in the past and in full during 1993 and 1996 respectively [World Bank (1999)]. However the introduction of agricultural income tax is a highly controversial issue in Pakistan, in government circles as well as among professional researchers and economists. Out of the nine commissions [Pakistan (1959, 1960, 1963, 1964, 1970, 1975, 1986, 1988, 1989 and 1993a)] that studied agricultural taxation only two recommended it. [Pakistan (1960, 1993a)]. The remaining seven favoured the existing land revenue system. The studies of individual economists are no less controversial in this respect. There seems to be a general consensus among such writers as [Hamid (1970); Yaqub (1971); Chowdhury (1971); Khan (1991) and World Bank (1999)] on the repeal of land revenue system in favour of agricultural income or graduated land tax. Against this an equal number of economists, have shown dissatisfaction with agricultural income tax as an effective tool of taxing agriculture [Ahmad and Stern (1989); Bird (1974); Bird and Oldman (1990); Chaudhry and Maan (1993); Gold and Foster (1972) and Newbery (1987)]. While the merits and demerits of agricultural income tax perceived by various writers in theory and practice are a major source of the controversy, the present paper attempts to provide an assessment of introducing the policy in Pakistan in the light of typical characteristics of a good tax policy if only to recommend viable alternatives.

Theory of Optimal Taxation and Current Tax Policy in Pakistan’s Agriculture

public finance into the mould of classical welfare economics by emphasising minimisation of dead weight losses resulting from the imposition of a tax or faulty tax structure. As such, these modern theories have much in common with the traditional approach in terms of efficiency and equity. In spite of this, however, the differences remain. For example, the former theories adhere strictly to the norms of classical welfare economics which treats individual consumers as utility maximisers where improvements in welfare involve change that makes one individual better-off without making someone else worse-off [Stern (1987)]. In contrast to the emphasis of traditional theories on lump-sum taxes, the optimum tax literature is concerned with the implication of using non-lump-sum taxes which have a wider range and therefore more useful to the policy-maker. The recent work on normative tax theory looks at the impact of taxation on individual decisions and the trade off between raising revenues or redistributing tax burdens and the efficiency losses [Atkinson (1987)]. Finally, the optimal tax literature may be more pragmatic in its approach than traditional works as it realistically deals with government objectives and constraints and combines them into models that are sufficiently rich to allow for differences between people regarding income and expenditure patterns.

Towards Inflation Targeting in Egypt: Fiscal and institutional reforms to support disinflation efforts

This paper reviews the prerequisites of inflation targeting, analyses the extent to which they are met in Egypt and examines whether the Egyptian economy, under its current status, is ready to formally adopt an inflation targeting regime. It discusses why developing strong fiscal, financial and monetary institutions is so critical to the success of inflation targeting and explains how, even if the prerequisites are not stringently fulfilled in the beginning of its adoption, the move towards them is believed to contribute to the macroeconomic stability of the country. More particularly, the focus is being put on fiscal balance, the financial sector and central bank independence. Since we believe that the latter is the most important condition in the inflation targeting implementation process, the paper discusses the CBE's independence and underlines the importance of issues related to transparency, credibility, technical capabilities and accountability. Finally, the paper draws some conclusions and formulates some policy recommendations on the adjustments the country should put in place in order to ensure a successful transition towards an inflation targeting regime. Keywords: Egypt, Inflation targetting, Financial reformsEgypt, Inflation targetting, Financial reforms

Agricultural Input Subsidies in Pakistan: Nature and Impact

Pakistan has a history of subsidising agricultural inputs. Although none of the agricultural inputs were subsidised during the early 1950s, the process was initiated in the second half of the decade by subsidising chemical fertilisers in order to popularise their use [Niaz (1984)]. The list of subsidised inputs and the rate structure of the subsidies were expanded considerably throughout the Sixties. Towards the end of the Sixties, it was noted that almost all the agricultural inputs including fertilisers, insecticides, seeds, irrigation water, tubewell installations, and the operation and purchase of tractors and tractor-related equipment were subsidised in one form or another [Aresvik (1967) and Kuhnen (1989)]. In the 1970s, some curtailment of subsidies occurred as a result of input price increases which followed the worldwide recession, a major oil shock, the credit crunch, the war with India, and the consequent steep devaluation of Pakistani Rupee [Chaudhry (1982)]. Although the subsidies had survived the onslaught of the Seventies and tended to persist on most inputs, the government became totally committed to their removal beginning with the 1980s, under pressures from the IMF and the World Bank [Government of Pakistan (1980)]. As a consequence, there was a total withdrawal of subsidy from seeds, insecticides, tubewells, and tractors. A phased-out withdrawal of fertiliser subsidy, culminating in 1984-85 in the case of nitrogenous fertilisers and in 1989-90 in the case of phosphatic and potash fertilisers, was also to be undertaken [World Bank (1986)]. The purpose of the present paper is to highlight the progress of withdrawal of input subsidies in Pakistan, to study the nature of the input subsidies and possibly analyse the impact of the withdrawal of subsidies on the farm sector. Needless to add that the study is also intended to make policy recommendations on the various aspects of subsidy withdrawal.

Resilience and Subjective Well-being among survivors of Dengue Fever

The purpose of the study was to explore the relationship between resilience and subjective well-being among the survivors of dengue fever. It was hypothesized that there would be significant positive relationship between resilience and subjective well-being among the dengue fever. It was correlation study in which cross-sectional research design was used. The sample size was one hundred (N=100) survivors which comprises of fifty male and fifty female dengue survivors. The sample was drawn by using purposive sampling strategy which is a technique of non-probability sampling because it is the nature of population which is survivors so this type of sampling is helpful for recruit sample in the study. Two scales Trait Resilience Checklist (Hiew, et al 2000) and Subjective Happiness Scale (Lyubomirsky, 1999) were used to measure resilience and subjective well-being respectively. SPSS-20 was used to run statistical analyses. The results showed that there is significant positive correlation between resilience and subjective well-being among survivors of dengue fever. Furthermore, a significant gender difference was found on subjective well-being that males are happier than females. The results are discussed in the light of already existing literature. Keyword; Resilience, subjective well-being,

Pakistan’s Agricultural Development since Independence: Intertemporal Trends and Explanations

The main objective of this paper has been to review Pakistan’s historical experience in agricultural development in terms of growth, income distribution, and rural poverty. While the long-term growth rates between 1949-50 and 1994-95 were satisfactory, the variations around the average have been rather too large over the various decades. Beginning with a stagnating sector of the 1950s, agriculture witnessed record growth rates during the Sixties. This was followed by the lowest growth rates of the early Seventies, and acceleration in the second half of the Seventies. The experience since 1979-80 has been mixed, but the growth rates have been rather low through the Eighties and the Nineties. The trends in income distribution and poverty varied directly in relation to the agricultural growth rates, especially when they were in excess of the threshold level of 4.5–5.0 percent per annum. In general, a growth rate of 5.0 percent or higher has induced positive changes in income distribution and poverty. In view of this positive association, the pursuit of a high growth policy in agriculture should guide Pakistan’s future development strategy. The efficiency of resource use, a greater dependence on modern technologies, and a minimisation of government intervention in the market mechanism are the essential pillars of the high growth strategy.

Finite-state codes

A class of codes called finite-state (FS) codes is defined and investigated. The codes, which generalize both block and convolutional codes, are defined by their encoders, which are finite-state machines with parallel inputs and outputs. A family of upper bounds on the free distance of a given FS code is derived. A general construction for FS codes is given, and it is shown that in many cases the FS codes constructed in this way have a free distance that is the largest possible. Catastrophic error propagation (CEP) for FS codes is also discussed. It is found that to avoid CEP one must solve the graph-theoretic problem of finding a uniquely decodable edge labeling of the state diagram