The Problem of Agricultural Taxation in West Pakistan and an Alternative Solution

In Pakistan the problem of resource mobilization has become acute in recent years. The Fourth Five Year Plan [34, pp.11-18], for instance, reported that the central government could finance only 72.5 per cent of its planned investment during the Third Five Year Plan. The provincial situation was described to be even worse. According to the estimates of the Planning and Development Board [47, p. 7] during the first four years of the Third Plan, the implementation of the public sector programme for West Pakistan was only 52.4 per cent. The fundamental reason of the shortfall of resources is that Governments have failed to tap all possible domestic sources of revenue. Taxation is [11, p. 29] by far the most important source of development finance both in its direct contribution to revenue and in its indirect effects on control, incentives and in reducing income inequalities. Taxation is necessary for the stable and sustainable growth of developing economies.