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Our Recommendation

1- All agriculture land must be distributed to small farmers by abolishing current feudal system and taking away land from big land owners. No land owner should keep more than 100 acres of irrigated and 200 acres of un-irrigated land, as was legislated by the parliament in 1977. The land granted by British (for services to the Crown) and post-independence huge agricultural and urban land grants largely to military officers and other state functionaries as well, are illegitimately acquired.

2- Agricultural income must be taxed the same way as other income is taxed. The agriculture is about 22% of the GDP and employs 45% of the total labor force of Pakistan but generates less than Rs. 2 billion in tax revenues. If proper tax law is applied to agriculture income, this amount could increase to Rs. 1,850 billion.



A country must concentrate on its most valuable natural resource – small farmers – and give them all the help they can, including:
- Loans for inputs (seed, fertilizer, etc.)
- Renting them farming equipment
- Price guarantee in case of market failure
- Transport to markets

Land reform plans have been rejected based on the argument that small farms are bad for productivity. It is not true. Many countries have small farms and much better productivity than Pakistan. Pakistan can increase its productivity three times or more by distributing its agriculture land to small farmers. The problem for productivity is not small farms. It is lack of help provided to small farmers. If needed, many small farms can be managed by creating a company that is run by professionals but ownership of the farms (and company) must remain with small farmers to guarantee their welfare and food security for the country. Both feudals and capitalists deprive the poor from their basis rights (i.e. enough food and large proportion of their actual and potential income) to live a good life. Food must be available to local people at a reasonable price and must not be allowed to export to make huge profits by a small group of people or companies.


The biggest obstacle in abolishing feudalism is the Federal Shariat Court (FSC) created by military dictator Zia ul Haq. On August 10, 1989, the Shariat Appellate Bench of the Supreme Court of Pakistan in its split 3-2 judgment declared that all land reforms by the previous governments as un-Islamic.  The court while recognizing the right of people to own the property, totally ignored the welfare of the society as whole and also the fact that the land granted by British (for services to the Crown) and post-independence huge agricultural and urban land grants largely to military officers, and other state functionaries as well, are illegitimately acquired.


The current feudal system is a disgrace for the country and an economic disaster both from the productivity and tax point of view. While agriculture is about 22% of Pakistan’s GDP, it generates only less than Rs. 2 billion tax revenues. At the same time, most of the rural population is uneducated and malnourished, barely surviving and living in a little better condition than animals. And the country keeps borrowing money from IMF and World Bank, etc. to pay for its expenses, selling even its future.


History of Land Reforms


The history of land reforms in this country started in 1949 with the Agrarian Reforms Committee of the Muslim League proposing short- and long-term measures to address the issue. The short-term measures were incorporated in the Tenancy Acts that were promulgated in Punjab, Sindh and NWFP between 1950 and 1952. The long-term goal of imposing a ceiling on landholdings never saw the light. Meanwhile, the East Bengal Land Acquisition and Tenancy Act of 1950 transformed the eastern wing of the country and imposed a 33-acre ceiling on landholding. Never a strongly feudal society, by 1954 the situation was such that none of the East Bengal Constituent Assembly representatives (1954-56) was a landlord compared to the 70 percent landlord-legislators from West Pakistan.

The martial law government of Ayub Khan brought forward the country’s first major land reforms in 1959. The ceiling on landholdings was imposed at 500 acres for irrigated and 1,000 acres for un-irrigated land.

Zulfikar Ali Bhutto had promised land reforms under his Islamic socialism agenda and, in 1972, a stricter ceiling was imposed at 150/300 acres for irrigated/un-irrigated lands and land was resumed without any compensation. In 1977, it was further lowered to 100/200 acres.


Effect of the 1959, 1972, and 1977 Land Reforms

By the end of the 1970s, Ayub Khan and Bhutto’s measures had benefited only 272,000 out of the total 10 million eligible rural population, and only 4.5 million acres of cultivated land (less than 10% of the total) were redistributed.


Legal Problems and the fate of Land Reforms


Ziaul Haq’s Islamisation and creation of shariat courts gave the opponents of land reforms — including the religious establishment — a golden opportunity to challenge them. In Haji Niamatullah v. NWFP government, the imposition of a ceiling on landholdings was declared un-Islamic. In December 1980 the Federal Shariat Court decided petitions against land reforms in Muhammad Ameen v. Islamic Republic of Pakistan (PLD 1981 FSC 23). It declared that it did not have the sufficient rights to declare it unconstitutional and even then it was not un-Islamic in any way to impose a ceiling on landholdings.

Appeals were filed and the Shariat Appellate Bench of the Supreme Court delivered its final split 3-2 judgment on the issue on August 10, 1989 in Qazalbash Waqf v. Chief Land Commissioner (PLD 1990 SC 99.) The lead judgment, written by Mufti Taqi Usmani, declared that all land reforms by the previous governments as un-Islamic.


The composition of the Shariat Appellate Bench is such that it has five judges, three from amongst the Judges of the Supreme court and two ulema judges from the Federal Shariat Court (or as nominated by the President). The three SC judges on the bench that heard the Qazalbash Waqf case were Justice Nasim Hasan Shah, Justice Shafi-ur-Rehman and Justice Afzal Zullah. The ulema judges on the bench were Mufti Muhammad Taqi Usmani and Pir Karam Shah (Mufti Muhammad Karam Shah). The two ulema judges were of the opinion that the said reforms were un-Islamic. Of the three “classically” trained judges – classically as in trained in common law – two dissented with the majority opinion. The “classical” judge who concurred with the majority opinion was Justice Afzal Zullah, a highly religious man who would later lead the vocal tirade against the first government of Benazir Bhutto to implement Qisas and Diyat Laws.

Note: Information provided here is mainly summarized from the article Land Reforms History Legal Challenges and how Shariat Courts Abolished Them by Shahid Saeed Khan published on


Tax on Agriculture Income - Summary

Pakistan tax-to-GDP ratio at about 9% is one of the lowest in the world. In violation of the Constitution of Pakistan and in collaboration with both military and civilian partners, big hereditary landlords and the newly created ones among the high-ranking military officers, pay no tax on “agriculture income.” Total tax on land (not on income) using the current law is supposed to be about Rs. 200 billion but less than Rs. 2 billion is collected. If proper tax law is applied to agriculture income, this amount could increase to Rs. 1,850 billion. The agriculture sector is depriving economy of Pakistan about Rs. 1,650 billion every year.


Overall Pakistan could collect Rs. 3750 billion from all eligible individuals (both agriculture and non-agriculture) but collects only Rs. 1590 billion that includes 70% indirect taxes (taxes other than on income.)


History of Tax on Agriculture Income 

The decision of taxing “agriculture income” through the Finance Act, 1977, passed by Parliament was never implemented. The feudal lords have not paid a single penny as income tax. It is however true that other oppressive taxes levied on small farmers on agricultural lands by the British remain in force even today. Both military and civilian rulers faithfully protected colonial legacy of unjust taxes but refused to implement a revolutionary measure taken by the Parliament in 1977 of taxing “agriculture income” at uniform rate in Pakistan.


The provincial governments are supposed to collect taxes under the current laws but there is a clear lack of will to tax absentee landlords in Pakistan—their number is meager but their political clout is very strong. This influential class includes generals and other high-ranking military officers, now owners of substantial state land, having emerged as a new landed aristocracy. Total collection by all provinces was dismally low at Rs 1.89 billion against the actual potential of Rs. 200 billions in 2009. Violation of the law is evident from the very fact that the former Prime Minister of Pakistan, Mr. Yusuf Raza Gilani has shown nil agriculture income tax in his declaration before the election Commission of Pakistan. He, like many other absentee landlords, does not even admit ownership of agriculture land, usually kept under religious trusts headed by spiritual leaders (Gaddi-Nashin Pirs.) These Pirs cum politicians cum businessmen dominate our economy and politics without paying taxes.


At the moment, salaried persons with income exceeding Rs. 300,000 are paying Rs. 100 billion as income tax. Landowners engaged in with the same level of incomes pay no tax at all. This is gross violation of Article 253 of the Constitution of Pakistan that stipulates tax on “agricultural income” and not a fixed levy on immoveable property.


If five millions agriculturists with an average income of Rs. 1.5 million per annum pay income tax at the current rate of 25%, the collection would be Rs. 1,850 billion. Our tax-to-GDP would jump up to 20% and there would be no fiscal deficit.  


Note: Information provided here is mainly summarized from PILDAT Briefing Paper: Tax on Agriculture Income, dated November 2011. 


Here is some data (2010) about agriculture land in Pakistan from an article in newspaper Nawa-e-Waqt by Mehmood Mirza:



Province Number of Land Owners Total Land (Acres) Big Land Owners (who own more than 5 acres) Small Land Owners (who own 5 acres or less)
KPK 16 Lacks 60 Lacks 18% own 68% land 82% own 32% land
Punjab 55 Lacks 2.88 Crores 32% own 76% land 68% own 24% land
Sindh 9.61 Lacks 1.07 Crores 48% own 89% land
52% own 11%land
Baluchistan 3.35 Lacks 1.01 Crores 61% own 97% land 39% own 3% land




1) Land Reforms - History, Legal Challanges, and how Shariat Courts abolished them (A must read article)


2) Tax on Agriculture Income, PILDAT November 2011 (PDF)


3) Land Reforms in Pakistan, DAWN Newspaper